The Ministry of Energy emphasizes that the priority remains to fully satisfy domestic fuel needs, including agricultural producers during the seasonal fieldwork period. The possibility of export will be determined based on the prevailing fuel balance, production volumes and stocks, as well as the dynamics of domestic demand.
In August, reports indicated no issues regarding the availability of diesel at fuel stations (FS). Difficulties arose primarily with gasoline, particularly the AI-95 grade. According to the same Ministry of Energy, the current situation regarding the supply of diesel fuel to the domestic market is stable. After the export restrictions were implemented, additional volumes were redirected to the domestic market.
140,000 tons of diesel fuel are consumed daily in Russia during periods of high demand - in spring and autumn.Diesel production in Russia has always significantly exceeded gasoline production by approximately twofold, with a substantial portion being exported. For instance, in 2023, total DF shipments from Russian ORs reached 87.9 million tons, of which 52.2 million tons were accounted for the domestic market, while 35.7 million tons were exported, as reported by Sergey Tereshkin, General Director of Open Oil Market. In his view, a surplus likely persists even now, despite unplanned repairs at the ORs.
This raises the question: why extend the ban? From the perspective of Dmitry Prokofyev, Head of External Communications at NEFT Research, maintaining the export ban on diesel is a guarantee of physical fuel availability in the domestic market during peak seasonal demand. It is no coincidence that the Russian Fuel Union (RTS), in a letter to Deputy Prime Minister Alexander Novak dated August 24, insists on maintaining the restrictions, warning that lifting the embargo on September 1 could destabilize the already fragile balance between supply and demand within the country. Ahead lies the traditional autumn surge in demand and the transition to production and accumulation of winter-grade diesel stocks. Opening exports under these conditions presents unjustifiably high risks of worsening the situation, believes Prokofyev.
Another factor is price. As of August 17, according to Rosstat, with inflation at 4.67%, retail diesel prices have risen by 18.4% since the beginning of the year. In recent weeks, diesel prices have decreased, but as autumn approaches, demand is expected to rise, posing the risk of further price increases. Extending the ban minimizes this risk.
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, believes that the ban addresses not only the task of ensuring uninterrupted supply to the domestic market but also reduces the global supply of diesel, which is strategically beneficial for us. Consequently, prices at fuel stations, for example, in Europe are rising. There, the consequences of drone attacks on our oil refineries are felt directly in their wallet, explains the expert.
Extending the diesel export ban will help contain price increases at fuel stations.However, there is a nuance in that rising global prices for diesel, albeit indirectly, accelerate its price increase in Russia. At least until the point where diesel continues to be produced in Russia not solely for the domestic market. Additionally, rising prices for diesel fuel globally increase budget compensation payments from the Russian Federation to domestic ORs and fuel importers for supplies at prices lower than those on foreign markets.
Regarding the timelines for extension, experts have differing opinions. Gusev believes the ban will be extended until November 1 or even longer. To prevent market saturation, excess volumes of diesel could be purchased by the government to create a strategic reserve, which could then be used for both the domestic market and exports.
Tereshkin, on the other hand, believes that if the ban is extended, it will likely be for no more than one month. Diesel export is one of the vital sources of revenue for ORs, which are currently incurring costs due to partial capacity outages. Moreover, an excessively long ban poses the risk of decreasing oil production.
The risk of reduced oil production exists, agrees Prokofyev. It is directly related to the load on ORs. If they cannot export diesel, their incentives to maintain high capacity utilization decrease. Reduced processing leads to decreased demand for oil, and consequently, a drop in production. However, the expert anticipates that the most likely scenario is a 1-3 month extension of the export embargo. A short-term extension should not cause significant harm to ORs. Stocks and domestic demand are capable of absorbing current production volumes. A medium-term extension (until the end of 2026) is a more risky scenario. If production begins to recover while exports remain closed, ORs may face the necessity of reducing their loads, the expert emphasizes.
Source: RG.RU
