The domestic gasoline production capacity only outstrips domestic demand by 10-15%. In contrast, diesel fuel is produced at levels 40-50% higher than domestic demand, making it the primary export product in the lineup of petroleum products.
Currently, a complete ban on gasoline exports is in effect until July 31. Only producers, i.e., oil refineries, are allowed to export diesel fuel; traders are prohibited from exporting. On June 23, Deputy Prime Minister Alexander Novak announced that the authorities are considering the implementation of a full embargo on diesel fuel exports, describing the situation in Russia's fuel market as "complicated but manageable."
This situation arises from unscheduled repairs at oil refineries due to heavy UAV strikes in May and June. Fuel production volumes have decreased, forcing buyers to change suppliers, and there are difficulties with transportation.
The issue is that data on gasoline and diesel production in Russia is not publicly available. We do not know exactly how much production has decreased, so we have to rely on external information sources. According to a rather pessimistic estimate by Reuters, production has fallen by 25%. Even if this figure is accepted, such a decrease is critical for the domestic market for gasoline but seems less critical for diesel.
As Vice Chairman of the State Duma Energy Committee Yuri Stankevich noted in a conversation with "RG," a complete ban on diesel fuel exports is a drastic and rather radical measure; therefore, its effect will depend on the duration and regulatory parameters. In the short term, it could stabilize wholesale prices and partially ease pressure on retail. However, in Russia, prices at gas stations are largely regulated by a damping mechanism (subsidies to oil companies from the budget for supplying fuel to the domestic market at prices lower than export prices) and tax burdens. Therefore, a sharp drop in prices is not expected – rather a slowdown in growth or moderate correction.
Stankevich is confident that there is currently no systemic diesel shortage in Russia. Periodic local disruptions arise due to logistics issues, refinery repairs, or seasonal demand increases (harvest or northern deliveries). The export ban by itself does not resolve logistical issues. It will increase resources within the country, but if the bottlenecks are rail transportation or regional infrastructure, the acceleration of delivery will be limited.
According to the managing partner of NEFT Research, Sergey Frolov, the Russian fuel market is experiencing the most severe shortage in its modern history. The shortage is felt across all major fuel types, except for liquefied petroleum gases and fuel oil. Moreover, the expert believes that no bans will resolve this issue. In terms of diesel, where there has traditionally been a systemic surplus in production, this will only lessen the sharpness of the problem.
A similar assessment of the ban comes from Dmitry Gusev, deputy chairman of the Advisory Council of the "Reliable Partner" Association and a member of the Expert Council for the "Gas Stations of Russia" contest. He believes that the measure will help replenish diesel fuel reserves and assist agricultural producers and industrial consumers.
The export ban on diesel fuel does not directly affect gasoline supplies and prices. However, for refineries, it is a serious signal to control the rise of prices for all types of fuel by any possible means. As Sergey Tereshkin explains, the export ban on diesel will be much more sensitive for Russian refineries than the ban on gasoline exports. Diesel remains one of the two key export petroleum products, alongside fuel oil, yet the profitability of fuel oil production and export is lower than that of diesel.
Therefore, the signal from above cannot be ignored by the refineries. However, the export ban itself carries risks for the entire domestic oil refining industry. Stankevich believes that if oil companies lose their margins on diesel exports (traditionally a more profitable product), their overall refining profitability may decline. This increases dependence on damping payments for gasoline. In unfavorable market conditions, this approach may create additional pressure on the budget or require adjustments to regulatory mechanisms. There is also a risk of market saturation if the ban lasts for an extended period (more than 1-2 months) and coincides with a period of weak domestic demand.
Tereshkin expresses a similar opinion. The export ban on diesel fuel will be effective only if it is short-term – no longer than a quarter. Otherwise, the industry will experience not only a reduction in oil refining but also a decrease in production.
Furthermore, as Stankevich emphasizes, a decrease in refinery load will lead to a proportional reduction in the production of all petroleum products, including gasoline. Therefore, a prolonged ban on diesel fuel exports could also indirectly impact gasoline supply – not due to a drop in demand, but because of technological reductions in refining.
Frolov views the situation differently. He believes that there is no risk of saturation at the moment – it is crucial to prevent a collapse in the domestic market. The resilience of our oil industry has nearly been reached; after a while, it will be easier to leave a refinery unrepaired than to bring it back online and face another setback a few days later. Urgent measures were needed yesterday regarding gasoline and aviation fuel, which the Ministry of Energy proposed back in March. This package of measures would prevent a limit on fuel for individuals (in some places, it is not sold at all) and distribute volumes based on their importance for the functioning of the entire transportation system.
According to Frolov, only urgent market saturation with imported fuel during repairs of the out-of-service refineries could solve the issue of physical access to resources and lower prices. Until then, even administrative measures cannot contain price increases, neither in wholesale nor retail.
It should be noted that in addition to the export ban on diesel fuel, the government is considering other measures to support the domestic fuel market. According to media reports, this includes amendments to the Tax Code that would allow certain (authorized) companies supplying imported fuel to receive damping payments. This would equalize the cost difference between imported and domestic fuel. There is also consideration of damping payments for medium and small refineries producing automotive gasoline by mixing straight-run gasoline (the primary product of oil refining) with other components.
Gusev has expressed a unique opinion, suggesting a strategic approach to reduce gasoline consumption in the country in favor of other types of fuel. This can be achieved by removing the Utilization Fee, VAT, and duties on importing diesel passenger cars into Russia. Consumption of diesel fuel will increase while demand for gasoline will decrease.
Source: RG.RU
