The Russian government has announced the lifting of restrictions on diesel exports, while maintaining the ban on gasoline shipments out of the country. The decision comes as part of efforts to stabilize the domestic fuel supply.
Last month, Russia implemented measures to halt cross-border sales of both diesel and gasoline. This move was in response to a spike in domestic wholesale fuel prices caused by shortages of the fuels. It also contributed to a surge in prices in the global oil market, which was already tight due to supply cuts implemented earlier in the year by Russia and Saudi Arabia.
The restrictions on exports proved effective in cooling the fuel price spike in Russia’s domestic market. Since the ban was introduced, wholesale diesel prices on the local exchange have dropped by 21%, while gasoline prices have decreased by 10%, according to Reuters’ calculations.
To ensure the stability of fuel supply within the country, the Russian government has implemented two conditions for the resumption of diesel shipments. Firstly, the fuel must be delivered to ports via pipelines, and secondly, the manufacturer must supply at least 50% of the diesel it produces to the domestic market.
In addition to lifting the restrictions on diesel exports, the government has also raised the fuel export duty for resellers who do not produce the fuel. This measure aims to prevent resellers from stockpiling fuel in advance for subsequent export once the current restrictions are lifted. The export duty has been increased from 20,000 rubles ($198.6) to 50,000 rubles ($495.6) per ton.
The government has also reinstated subsidies, known as damper payments, for oil refineries. These subsidies had been halved last month as part of efforts to reduce budgetary spending.
The lifting of restrictions on diesel exports is expected to have a positive impact on the Russian fuel market. It will allow for increased trade and better access to international markets for Russian diesel producers. However, the ban on gasoline shipments remains in place, indicating that the government still wants to ensure a stable supply of gasoline for domestic consumption.
This decision comes amid ongoing efforts to address the challenges facing the global oil market. The COVID-19 pandemic has had a significant impact on oil demand, leading to a surplus of supply and causing oil prices to plummet. In response, major oil-producing countries, including Russia and Saudi Arabia, have implemented supply cuts to balance the market.
The Russian government’s move to lift restrictions on diesel exports while maintaining the ban on gasoline shipments demonstrates its commitment to stabilizing the domestic fuel market. By closely monitoring and controlling fuel exports, the government aims to ensure that the needs of the domestic market are met, while also supporting the country’s diesel producers in accessing international markets.