Moreover, as a temporary fuel importer, our country is currently disadvantaged by disruptions in oil supplies from Gulf countries. In the context of supply shortages, this could impact gasoline exports to our country. Foreign refineries will primarily focus on supplying their domestic markets with fuel before shipping it abroad, leading to potentially higher export prices.
For instance, in the spring, during the height of the first wave of confrontation between the US and Iran, India increased export tariffs on gasoline, diesel, and aviation fuel due to the blockade of the Strait of Hormuz, making them more expensive for buyers. India is considered the main potential supplier of gasoline to Russia from distant foreign countries. The higher the price of Indian gasoline, the greater the amount that will need to be compensated for by Russian importers from the state budget.
Subsidies (a damping mechanism) are paid to oil companies for supplying fuel to the domestic market at prices lower than export prices.
This compensates for part of the difference (a coefficient of 0.68 for gasoline, 0.85 for diesel) between indicative wholesale prices (set by the government for the year) in Russia and the export alternative (in Europe).
We are forced to import fuel due to the reduction in production by domestic oil refineries. According to Deputy Prime Minister Alexander Novak, this occurred due to unplanned repairs at refineries following drone strikes. Estimates suggest that the reduction in oil refining volumes ranged from 20% to 30%.
At the same time, we are unlikely to purchase diesel fuel (DF) abroad, as production in our country exceeds consumption by a factor of two. Moreover, diesel exports from Russia have been prohibited since July 9. However, starting in July, Russia is importing gasoline, to which the damping mechanism will also apply. For imports from EAEU countries, a coefficient of 0.9 is set, while a separate formula based on import parity (linked to the Indian market) is introduced for supplies from other countries. Given that the compensation is incomplete, domestic prices could rise if fuel prices on global markets reach record levels.
Price hikes have already impacted Europe, with diesel (DF) prices rising by an average of 14% since early July, while gasoline increased by 10%. This surge was triggered by news of renewed tensions in the Middle East, although a physical shortage has yet to be felt. In India, prices did not rise in July, but since the onset of the Iran-US conflict, they have increased by 7.8%. Initially, gasoline in India was significantly more expensive than in Russia.
However, the issue is not only related to the prices of imported gasoline and its availability but also to import volumes. Estimates suggest that the reduction in oil refining volumes in Russia ranges from 20% to 25%. Approximately 3 million tons of gasoline are consumed monthly in our country. A significant volume of imports comes from Belarus, with 141,000 tons in June. Kazakhstan could supply around 50,000 tons of gasoline to Russia. This implies that our fuel demand from distant foreign countries will hardly exceed 450,000 tons per month. Considering government measures (permitting a reduction in gasoline quality and production by blending) and the resumption of refinery operations, the volume of distant imports is unlikely to exceed 300,000 tons. Therefore, the burden on the budget from fuel subsidies due to imports may rise slightly above 10% (considering the coefficient differences).
As noted by Dmitry Gusev, Deputy Chair of the Supervisory Board of the Association "Reliable Partner" and member of the Expert Advisory Council of the "Gas Stations of Russia" competition, we remain key suppliers of raw materials to all our potential fuel exporters. Furthermore, the overwhelming majority of gasoline and DF will continue to be produced in Russia, meaning that the Hormuz crisis will have little effect on domestic market prices. However, should global prices for petroleum products continue to rise, it will inevitably affect the Russian market.
Regarding the availability of imports, the expert does not rule out that the gasoline supply in foreign markets may shrink. Nonetheless, considering that we are the suppliers of the raw materials to fuel producers, this is unlikely to significantly impact Russia.
While we cannot fully close the potential oil deficit, the situation in the Middle East will affect India's access to oil imports. Last year, India imported 262 million tons of oil, of which 36% (95 million tons) came from Saudi Arabia, Iraq, and Kuwait, countries whose export capacities are heavily dependent on shipping dynamics in the Strait of Hormuz. An additional 10% of supplies (26.7 million tons) were provided by the UAE, which can export about half of its produced oil through the Gulf of Oman, circumventing the Strait of Hormuz.
The volumes of possible gasoline supplies to Russia from distant foreign countries are too small to materially affect its cost at gas stations.Key foreign fuel importers to Russia include Belarus, Kazakhstan, India, and China, according to Sergey Frolov, managing partner of NEFT Research. Fuel is delivered to Russia by sea only from India and in small volumes (estimates suggest supplies total 60,000 to 80,000 tons). This is negligible compared to the average monthly gasoline consumption in Russia, which is about 3 million tons. Therefore, there is currently no discussion of these supplies impacting the prices of petroleum products in Russia. Railways are the primary transport method for deliveries from other countries, the expert clarifies.
Frolov emphasizes that global gasoline quotations have little impact on Russia since the national wholesale price is established based on the balance of supply and demand in the domestic market, while the retail fuel price is regulated by the state.
All of the aforementioned is valid on the condition that fuel imports will not be long-term; that is, that domestic refineries will restore capacities within one or a maximum of two months. If this does not happen, or if unplanned plant shutdowns continue, the effect of fuel imports will accumulate, which could more significantly impact both domestic retail prices and budget revenues.
Queues at Gas Stations Shrink: The Situation with Gasoline Normalizes in the Regions
The situation with gasoline is gradually but surely normalizing. As reported by correspondents from the field, in several regions, the fuel dispensing limits have been increased at gas stations, and in some areas, waiting times have been reduced to ten minutes.In Udmurtia, gasoline supplies to municipalities have been doubled, as reported by Prime Minister Roman Yefimov during an emergency meeting. Notably, just a month ago, nearly 50% of gas stations in Izhevsk were closed, with motorists spending hours in queues. Now, those queues have significantly reduced. One major gas station network has doubled its supply to the regions, and replenishment in the northern areas is ongoing. Current fuel supply volumes are approximately equal to the levels of July last year, albeit with an additional 7 to 10 percent to saturate the market.
The number of complaints is falling, but the issue remains more acute outside the Izhevsk agglomeration. Therefore, the priority is to ensure reserves for school buses, heating, and emergency services.
Farmers purchasing fuel in bulk receive diesel from a single operator based on applications and quotas. The issue regarding fuel for farmers should be resolved by July 20.Filling canisters is still prohibited; with 675,000 vehicles in the region, even 400,000 refills of gasoline at 10 liters would yield an extra 12,000 tons – equivalent to nearly four trainloads – which could cause a collapse.
Governor of Vladimir region Alexander Avdeev stated that the region has managed to halt the growth of waiting queues at gas stations. Currently, the average waiting time is between 20 to 40 minutes. Fuel companies have increased their gasoline supply volumes, though the exact amounts remain undisclosed. Meanwhile, network gas stations have kept price increases "within recommended limits." The specifics of these limits have not been clarified. According to gas station locators, the price for AI-95 at major operators is between 67 to 73 rubles per liter, while prices at private gas stations reach up to 160 rubles.
In the Vladimir region, waiting times have decreased from several hours to 30 minutes.
Since July 14, gasoline supplies have also increased in the Vologda region. PAO "LUKOIL," which controls over 90% of stations in the region, has raised the fuel dispensing limit per individual to 30 liters, as reported by regional head Georgy Filimonov.
The company has canceled technological breaks at gas stations, only maintaining them for the time required to unload fuel trucks, and has increased daily shipping volumes. Daily shipments are already saturating the market.
In Vologda, efforts are being made to support drivers. Mayor Sergey Zhestyannikov stated that entrepreneurs and volunteers are assisting residents waiting for refueling. For example, hot pizza, muffins, and drinking water were distributed for free—almost 550 liters of water were handed out in a week.
Volunteers continue to stay at gas stations: regulating traffic flows, advising drivers on available stations, and assisting individuals with disabilities. Such helpfulness demonstrates the city's ability to unite during challenging times.
Mayor of Cherepovets Andrey Nakroshaev reported that in the past two days, 13 fuel trucks have arrived in the city.
"Starting Thursday, a night shift of volunteers will be launched in Cherepovets, allowing for orderly assistance to motorists around the clock," explained the city administration head.
City leaders are working to normalize operations at gas stations. Overall, authorities estimate that the region is gradually returning to previous supply levels, and the measures taken are effective. "We visited a gas station in Vologda on Preobrazhenskaya Street yesterday. There was no one in the morning, and we were able to refuel calmly," drivers have noted on social media.
According to our correspondent from St. Petersburg, gas station queues in the Northern capital seem to have diminished as drivers began actively utilizing services that show the availability of fuel at various gas stations, dispersing the influx of motorists. Gas stations in less-trafficked locations appear to have been ignored by apps, as our correspondent was able to refuel at one such station with only a 10-minute wait and just three cars ahead. However, the AI-95 fuel was depleted, leaving only AI-92 available, priced around 65-67 rubles.
Source: RG.RU
