On July 8, Russia imposed an export ban on diesel fuel, the last petroleum product previously unaffected by embargoes. A week prior, a legislative bill was passed in an attempt to address the issues of fuel shortages and rising gasoline prices. Small oil refineries have been granted the right to produce Euro-3 standard fuel, while larger refineries will have extended modernization deadlines and financial support for reconstruction. Importers have also been incentivized, as they are now eligible for damping payments for the first time. Experts believe that some measures, such as stimulating imports, are either overdue or too targeted, addressing issues faced by specific regions or petrol station networks. Amid the crisis, releasing prices, strictly limiting the sale of gasoline, and abolishing the damping mechanism could be timely; however, authorities appear reluctant to trust market forces and prefer to allocate budget funds instead. Questions arise as to how much money refineries will receive, where Euro-3 fuel will be sold, and whether these measures will effectively mitigate the crisis, as explored by Forbes. The tense battle of Russian authorities against the fuel crisis has been ongoing for several months. On April 2, 2026, ahead of the seasonal rise in fuel prices, the government imposed a total ban on gasoline exports until the end of July, with exceptions for supplies under intergovernmental agreements. This decision was attributed to rising global oil and petroleum product prices due to the ongoing conflict in the Persian Gulf. At that time, price increases were successfully curtailed for a brief period. On April 2, the price of AI-92 gasoline fell by 4.8% from a peak of 68,504 rubles, recorded on March 24, to 65,196 rubles, while the price of AI-95 dropped by 3.4% to 70,031 rubles, compared to the March 24 high of 77,483 rubles. However, the effects of the export ban were short-lived. Supply decreased due to drone attacks on oil refineries. By May, according to Rosstat, which does not provide absolute production figures, the output of petroleum products fell by 13.5% month-on-month. The producer prices for AI-92 increased by 0.8% from April and by 13.2% compared to May 2025. AI-95 gasoline prices rose by 0.8% from the previous month and by 12.7% year-on-year. In the retail market, the weekly price increase for AI-92 per liter accelerated. From April 27 to May 4, it rose from 63.53 rubles to 63.59 rubles (0.1% increase), and from May 26 to June 1, it surged to 0.4%, with prices rising from 63.89 rubles to 64.17 rubles. The price of AI-95 also increased, jumping from 68.99 rubles to 69.01 rubles (0.1% from late April to May 4) and later from 69.46 rubles to 69.78 rubles (0.5% from May 26 to June 1). In the week of June 16 to 22, the price of AI-92 rose by 3.2%, from 65.41 rubles to 67.54 rubles, while AI-95 increased by 2.9%, from 71.11 to 73.2 rubles. However, during the week of June 23 to 29, the rate of increase slowed: retail prices for AI-92 rose by 1.7% to 68.76 rubles per liter, and for AI-95, by 1.6% to 74.38 rubles. The increase in prices has been attributed to a shortage of gasoline and diesel, which emerged in many regions of Russia starting in late May. Long queues formed at petrol stations, and local authorities nationwide began limiting fuel sales. On June 28, President Vladimir Putin publicly acknowledged the fuel deficit, describing it as "non-critical." On July 8, the government banned the export of diesel fuel, as Vice Prime Minister Alexander Novak reported at a meeting with Putin and government members regarding the fuel market situation. Novak noted that Russia would begin importing petroleum products in July, and the government postponed several refinery repairs to later dates. Earlier, on June 24, the State Duma passed a government bill concerning amendments to the Tax Code. The measures are designed to combat the fuel deficit. President Putin signed the law on July 4. The bill permits producers to mix straight-run gasoline (naphtha) with other components to produce high-octane fuel. The resulting Euro-3 gasoline is equated to high-quality Euro-5 fuel, allowing its producers to receive benefits similar to those of other suppliers, despite the sulfur content being 15 times higher than Euro-5, at 150 mg per kilogram of fuel. On July 2, Prime Minister Mikhail Mishustin signed legislation permitting refineries and oil depots to produce Euro-3 class gasoline and diesel for the domestic market until the end of 2026. According to Sergey Selin, director of market analytics at the "Siala" agency, smaller refineries could benefit from the reduced environmental fuel standards. He explained that sulfur is removed from petroleum products at hydrocracking installations, which large refineries possess and require significant volumes—ranging from hundreds of thousands to over a million tons of gasoline per year—for efficient operation. Smaller refineries, particularly in northern Russia and even larger ones in the south, built decades ago, lack such installations and can only produce Euro-3 gasoline. "This fuel works excellently for the machinery on-site," Selin states. Maxim Shevyrenkov, head of the commodity market analysis center at the Institute of Energy and Finance (IEF), believes that the reduction of environmental standards for gasoline, combined with limited releases of fuel at petrol stations, will effectively alleviate the deficit, particularly in regions with relatively small fuel storage capacities. The negative environmental impacts from using such fuel will be relatively inconspicuous, he asserts. Stanislav Mitrahovich, an expert from the Financial University and the National Energy Security Fund, notes that a relatively uncomplicated adjustment in refinery processes can yield a greater quantity of Euro-3 gasoline. "This fuel is not of the best quality, nor is it particularly beneficial for the environment or modern engines, but overall, it functions quite well," he remarks. Most of the Euro-3 gasoline will likely be sold near production sites—mainly in the northern regions and Krasnodar Krai, according to Selin of "Siala." He mentioned that the volumes in question are not substantial, and during peak consumption seasons, this gasoline may not suffice for other regions, emphasizing that the production of such fuel is not a panacea but rather a temporary fix to the deficit issue. Many existing engines were designed with Euro-3 in mind, so the fuel is unlikely to cause them harm. However, auto service centers are already reporting an uptick in damaged vehicles. The number of inquiries in June rose by approximately 10-15%, stated Forbes co-owner of the VR Auto service aggregator, Mikhail Kozhanov. He indicated that all categories of motorists are affected, from luxury brand owners to those with domestic and Chinese vehicles. "Most modern cars are adapted for Euro-5 fuel, yet nowadays, they are increasingly being filled with Euro-4 or Euro-3, leading to damage to engine components, filters, spark plugs, and injectors. The problem is real, [inquiries] are growing, and this trend will only continue. Not all vehicles react immediately. Disruption in fuel injection systems may manifest after several instances of poor-quality refueling," Kozhanov explains. Permitting the production of Euro-3 gasoline will partly resolve the deficit issue and assist small producers in increasing fuel output. The new legislation also benefits major enterprises. The deadline for reconstruction agreements for refineries has been extended until December 31. This applies to those plants that entered into modernization contracts with the Ministry of Energy before June 1, 2019, amounting to at least 60 billion rubles, and were scheduled to launch new capacities by January 1, 2026, but did not meet the deadline. Back in 2019, the Ministry of Energy entered into agreements with major oil companies, allowing them the right to a tax refund on oil raw materials, contingent on one of two conditions being met: either the share of Euro-5 gasoline must be at least 10% of the total refining volume, or investments in modernization must exceed 60 billion rubles from July 1, 2014, to January 1, 2026. The new law raises the minimum investment threshold for modernization from 60 billion to 100 billion rubles. Oil companies that entered into modernization agreements with the Ministry of Energy can claim tax deductions on oil raw materials—the so-called "reverse excise." According to Open Oil Market's General Director Sergey Tereshkin, this essentially serves as a subsidy calculated based on a complex formula correlating to the volume of crude oil processing. Since 2021, an investment surcharge of 30% of the reverse excise has been added to this mechanism. However, previously only companies investing 60 billion rubles or more in new refining units were eligible for this. The new threshold has now increased to 100 billion rubles, and funds allocated for restoring technological installations that were recently subject to unscheduled repairs may also be included, says Tereshkin. The reverse excise tends to be collected by large refineries, typically part of vertically integrated oil companies (VIOCs) that have resources to implement secondary oil refining units. In 2025, such refineries received 2.39 trillion rubles, with nearly 1.3 trillion rubles stemming from the reverse excise and 170 billion rubles from the investment surcharge, Tereshkin noted. Another adopted measure to counter the deficit is the import of fuel. On July 1, Reuters reported that summer gasoline consumption in Russia is estimated at 110,000 tons per day, indicating that at least 60,000 tons of gasoline had already been dispatched to Russia from India. Additionally, Kazakhstan has reportedly agreed to supply 50,000 tons of gasoline to Russia in July and August. Furthermore, Moscow plans to import approximately 400,000 tons of gasoline monthly from various countries, including Belarus, which has tripled its supplies to Russia in early June to 70,000 tons compared to the same period in May. To stimulate imports, under the new law, companies that will sell foreign-produced fuel in Russia will be eligible for damping payments for the first time, with the list of sellers to be determined by the government. The damping mechanism compensates producers and importers for the difference between domestic and external fuel prices. If the export price is higher than the domestic price, making exports more profitable, the government compensates producers for the difference; if it's negative, companies must pay into the budget. For importers, the authorities reimburse the difference between external prices and domestic market prices. The damping for producers is calculated based on the difference between actual external prices and fixed internal prices. This year, the fixed internal threshold for AI-92 gasoline is set at 62,300 rubles per ton, while for diesel, it is 58,950 rubles. This same threshold will apply to importers, except that the actual prices within the EAEU will be used as the external price indicator, explains Tereshkin from Open Oil Market. For gasoline produced in other countries, the law stipulates that the damping payment amount will be defined by the Federal Antimonopoly Service (FAS) based on the indicative price of AI-92 gasoline in India and the cost of delivering it to Russia. According to Tereshkin, the price of gasoline in the Indian market is unlikely to be lower than Russian prices as global prices have yet to return to February 2026 levels. According to data from the FAS, the average price of the export alternative for AI-92 gasoline increased from 57,976 rubles per ton in February to 98,897 rubles per ton in May 2026. This figure is calculated based on European prices, Tereshkin warns; however, the situation in Asian markets is not expected to be substantially different. For fuel importers from the Eurasian Economic Union (EAEU), which includes Belarus, Kazakhstan, Kyrgyzstan, and Armenia alongside Russia, the compensation coefficient for imported fuel volumes is higher than that for Russian fuel producers: 0.9 compared to 0.68. Furthermore, payments will be applied retroactively starting June 1, 2026. From this date, the volume of imported gasoline from Belarus and Kazakhstan for calculation purposes will be multiplied by 0.9, meaning that higher imports translate to significantly larger damping payment amounts, Tereshkin explains. Another measure taken by the government is a reduction in the mandatory sales quota for gasoline at exchange auctions, lowered from 15% to 10% of production volumes. This norm will be effective from July 1 to September 30, 2026. The reduction of quotas, according to Shevyrenkov from the IEF, will allow major oil companies to utilize gasoline that was not placed on the exchange at their petrol stations. As VIOCs face a gasoline shortage to meet their supply needs, the decision has been made to sacrifice some independent petrol stations that previously sourced fuel from the exchange, adds Selin. Tereshkin from Open Oil Market disagrees with the reduction of exchange sales quotas, labeling it an incorrect decision. He believes it will make gasoline and diesel less accessible to independent petrol stations, especially in areas lacking sufficient independent station coverage. The FAS has also engaged in fuel crisis resolution efforts, informing on July 6 that its Moscow regional department has initiated cases against six independent market participants for allegedly raising gasoline and diesel prices at their stations simultaneously, while the Orenburg department has launched similar cases against three other independent market players. As of now, the measures implemented have not yet yielded results. According to the latest data from Rosstat, from June 29 to July 6, the rate of gasoline price growth accelerated. AI-92 increased by 2% from the previous week to 70.21 rubles per liter, AI-95 rose by 2.3% to 76.19 rubles per liter, and diesel prices surged by 3.4% to reach 87.76 rubles. This time, Rosstat did not specify which region experienced the steepest price increases. Last week, this was Sevastopol, where gasoline prices spiked by 30%. However, a significant increase to 197 rubles per liter for AI-95 was highlighted by Sevastopol mayor Mikhail Razvozhayev during a recent report to Putin. According to Tereshkin from Open Oil Market, measures to stimulate fuel imports should have been taken a few months earlier, when the risk of unforeseen technological downtimes at refineries was already apparent. This foresight might have helped avoid long queues at petrol stations. In light of the current market situation, Selin from "Siala" suggests that now might be the right time to shift to free pricing on the St. Petersburg exchange and at petrol stations, as well as ending the damping mechanism. This could encourage commercial fuel imports and rapidly alleviate internal market shortages. Conversely, Shevyrenkov from the IEF believes that the best way to combat the rush demand for fuel would be to impose restrictions that authorities should implement at all petrol stations across the country. Source: Forbes