End consumers include gas stations (GS), processing enterprises, and large companies with significant private vehicle fleets (for instance, transportation, mining, agriculture, and others).
Transactions for third parties will be permitted for brokers, the number of which is limited to trading participants who possess membership status in the exchange's "Oil Products" section. If, after a transaction, there is an attempt to resell fuel purchased "for own needs," that buyer's access to trading will be revoked. The same rule applies to brokers as well.
Furthermore, starting from July 1, mandatory gasoline sales volumes on the exchange for oil refineries have been reduced from 15% to 10% of production volumes. Currently, a similar measure is under review for DF, with a proposed reduction from 16% to 10%. This is also aimed at facilitating more direct transactions, bypassing intermediary exchanges. For example, direct supply contracts between GS and oil refineries.
The decision has been made by the exchange in response to fuel supply issues in the regions and a sharp increase in prices at gas stations. Previously, during a government meeting, Deputy Prime Minister Alexander Novak spoke about the necessity to refine the exchange trading system, ensuring fuel flows directly to end consumers and eliminating speculators who inflate prices.
The ability to conduct transactions for third parties will be available to brokers, the number of which is limited to trading participants with membership status on the exchange.Formally, everything seems logical: fewer intermediaries (traders) should lead to lower prices since each added their "interest" to the cost of each liter. The problem is that the exchange's role in our fuel market has collapsed this year. In July 2023, volumes of exchange sales of gasoline and DF declined by more than half compared to the same period last year. However, fuel consumption in Russia has not decreased. This indicates that trading has shifted to alternative channels. Over-the-counter sales are virtually unregulated by the state. They can occur directly: from GS to oil refinery, or may pass through traders.
As noted in an interview with "RG" by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council for the "Gas Stations of Russia" competition, currently the key price indicator in the fuel market is small wholesale transactions (outside the exchange), which have become the primary factor driving prices upward. Consequently, a situation arises where exchange prices for fuel are relatively low, as are those at the gas stations of major oil companies, while the small wholesale price can reach up to 200,000 rubles per ton. In this context, clear and understandable operational mechanisms need to be implemented rather than just relying on market economy principles. A state regulation system for the fuel market, utilizing big data and artificial intelligence, is more efficient and less dependent on human factors and market information. Conversely, the exchange remains highly reliant on these factors, emphasizes the expert.
On the other hand, traders have not emerged from a vacuum. Firstly, they benefit from economies of scale. Many independent GS (over half of the gas stations in Russia), which are not owned by large oil companies, simply cannot afford to acquire their storage for fuel, enter contracts with oil refineries, and ensure transportation. For them, this would impose an unbearable financial burden.
According to energy expert Kirill Rodionov, traders are the traditional scapegoats in the market. Whenever there is talk of rising prices, they are invariably blamed. In reality, traders are a natural part of any market, including fuel. They are intermediaries with the financial and logistical capabilities to buy fuel on the exchange and subsequently resell it to gas stations. The effectiveness of utilizing traders depends on the level of gasoline sales on the exchange. The greater the sales, the more fuel will be available to the independent fuel retail sector at reasonable prices. The current issue lies in the insufficient fuel supply in the market. Increasing the supply on the exchange and attracting traders could help balance the market and reduce the significant price discrepancies between various gas stations, according to Rodionov.
Sergey Tereshkin, General Director of Open Oil Market, shares a similar view: the fuel market cannot exist without traders. The role of traders is, to some extent, derivative of exchange regulations: the higher the regulations, the greater role traders can play in stabilizing the market.
However, the current supply is limited, meaning that discussions about increasing exchange regulations can be deferred for now. Moreover, from the perspective of analyst Sergey Kaufman from FG "Finam," the reduction of fuel sales regulations only indicates that even vertically-integrated oil companies (VINKs), which manage the complete production cycle—from oil extraction and refining to fuel sales at their gas stations—are struggling to meet their standard commitments due to insufficient gasoline. Under these circumstances, VINKs must send less fuel to the exchange to ensure their own gas stations remain supplied.
Kaufman believes that restrictions on regulations and the new trading rules on the exchange will have no impact on retail prices for gasoline and DF. This does not increase the overall fuel availability in Russia but merely alters logistics slightly. In some cases, it may help expedite fuel delivery to end consumers. Still, the main issue at the St. Petersburg Exchange remains the physical shortage of fuel. Trading volumes have decreased significantly, and prices are artificially capped (a step rule of 0.01%—the maximum allowable daily price increase), often making it physically impossible to purchase the required fuel volume. With the restoration of oil refining, the fuel market could quickly revert to normal, and gasoline prices could decrease relative to the current abnormal levels, the expert asserts.
The state regulation system for the fuel market, using big data and artificial intelligence, is the most effective.The current situation poses the greatest risks for independent gas stations, according to Tereshkin. Exchange trading itself will rebound quickly following the lifting of restrictions. The real question is how the pool of end fuel consumers changing from the exchange will evolve: many independent gas stations without direct access to fuel supplies may not survive this crisis.
Rodionov believes that traders are also at risk. Some companies may disappear. However, the market and exchange trading could recover very swiftly. Once restrictions are lifted.
But the date for lifting the restrictions is currently unknown. The limitations on gasoline purchases by end consumers have been enacted on an indefinite basis. Meanwhile, the fuel sales regulations on the exchange have been reduced until September 30, although this measure may be extended if necessary.
Source: RG.RU
