This news would have garnered significant media attention in the past, but now it has gone largely unnoticed. Current exchange quotations have minimal impact on retail fuel prices, and trading volumes have decreased by three times. Just over 10% of Russia's daily gasoline consumption passes through the exchange. Supply is now mostly circumventing trading, focusing on wholesale and small wholesale segments. Final prices differ significantly from exchange quotes. Moreover, the exchange trading does not increase the output of gasoline and diesel fuel, and the primary challenges now are related to ensuring all gas stations (GSs) receive the necessary amount of fuel.
The situation regarding fuel availability, primarily gasoline, is expected to normalize very soon. Oil refineries (ORs) are gradually exiting unscheduled repairs and ramping up production volumes. The export of gasoline and diesel fuel from Russia is prohibited, and all produced fuel is directed to the domestic market. Imported gasoline is beginning to arrive in the country, with the largest volumes coming from Belarus, as well as supplies from India, Morocco, and Turkey.
From September 1, gas stations are allowed to sell fuel of environmental class below "Euro-5". All these measures are expected to increase the fuel supply in the market.
However, perhaps the most critical factor will be that September marks the seasonal decline in gasoline demand, as the holiday and dacha trip periods come to an end. This year, the autumn drop in demand could be more substantial than in previous years.
As noted in a conversation with "RG" by Dmitry Gusev, deputy chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council of the "Gas Stations of Russia" competition, many car owners are currently parking their cars or minimizing trips using personal vehicles if public transport is available. This is due both to rising prices and queues at gas stations, which can waste their time. Estimates of demand reduction from these factors range between 10% to 30%.
According to Sergey Frolov, managing partner of NEFT Research, sustainable stabilization of the situation can only be expected after demand and consumption return to balance across all regions of Russia.
Given the measures being adopted, there is hope that by September, the queues at gas stations will finally dissipate. The pressing issue, however, is the prices at which this fuel will be sold. According to Rosstat, from the beginning of the year until the end of the summer period, gasoline in Russia has increased in price by an average of 19.4%, while diesel has risen by 18.4%. In some regions, price increases by twenty percent or more outpace the average level across Russia.
This brings attention to the issue of pricing. Gusev believes that exchange trading has never been closely linked to retail prices and is even less so now. However, they serve as an indicator for the market. Based on these prices, wholesale and small wholesale prices fluctuate, which is then reflected at gas stations.
In small wholesale, gasoline prices sometimes exceed exchange prices by one and a half times.In large wholesale, at refineries and major oil depots, prices are almost identical to those on the exchange, differing by only 1-5%. Here, network gas stations, usually owned by oil companies, make purchases. In small wholesale, independent gas stations, industrial enterprises, and agrarians primarily buy from oil depots, where the cost of fuel now exceeds exchange quotes by 8-10%. A larger gap is often observed. This is why prices at independent gas stations (which account for more than half of stations in Russia) are higher than at network stations.
As emphasized by Sergey Tereshkin, CEO of Open Oil Market, the gap between exchange prices and the over-the-counter segment has always been typical. However, this difference has become particularly pronounced: the price at which independent gas station operators purchase gasoline exceeds the exchange level by one and a half to even two times.
Under the new rules, all over-the-counter fuel purchases of over 1 ton are now registered on the exchange. However, this is currently a voluntary process (until March 1, 2027). The Federal Antimonopoly Service (FAS) will monitor to ensure prices do not spike. Additionally, if the purchase is made directly by the gas station, registration of the transaction is required only for acquisitions of over 60 tons of fuel. This exception has been made because gas station prices are already under FAS control.
Therefore, such price increases as those seen this summer should not occur again. Considering the decline in demand and the increase in fuel volumes entering the market, there may even be a drop in prices. The difficulty lies in the fact that the measures taken do not yet address the systemic issues within domestic oil refining.
Frolov believes that even after all existing refineries complete their planned and unplanned maintenance, the question of further systemic development of oil refining will remain. This year's events have highlighted long-existing problems in the industry.
Tereshkin is confident that this year, unplanned repairs at refineries became the defining factor for our fuel market. Despite the stabilization in the fuel market situation, the issue of partial capacity loss remains relevant.
In simple terms, we need new refineries, and the production and sale of fuel domestically must be more profitable than exporting crude oil.
Gusev believes that the issues facing our oil refining this year were rooted in the tax maneuver (elimination of export duties on oil and light oil products starting in 2024 and the increase of the mineral extraction tax). As a result, investment attractiveness for constructing new refineries and the oil refining sector, in general, has diminished.
Source: RG.RU
