How will the government's decision affect prices at gas stations
The government has lifted the ban on gasoline exports, but this decision is of a test, experimental, and not of an indefinite nature. That is, if fuel prices rise sharply on the stock exchange by the end of June, the embargo will be restored. Thus, the authorities continue to control the situation on the wholesale market virtually manually. As for prices at gas stations, according to experts, there is no need to worry about them: there will be no increase.
The restrictions introduced on March 1 covered the period until June 30, 2024. So far, their abolition (again, temporary, for the same period) has only been agreed upon by the Cabinet of Ministers: this week it should take the form of a corresponding resolution and come into force from the moment of publication. Meanwhile, since May 7, in anticipation of the ban being lifted soon, exchange quotes for AI-02 and AI-95 have increased by more than 5% — to 48.2 thousand and 54.4 thousand rubles per ton, respectively.
According to experts, the embargo helped smooth out the consequences of drone attacks on a number of large Russian refineries, in particular, Ryazan, Kuibyshev, Syzran and Nizhny Novgorod. Despite the fact that in April, due to repairs, oil companies reduced the production of high-octane gasoline by 0.8% (to 2.57 million tons) relative to last year’s levels, supplies to the domestic market increased by almost 7% (to 2.43 million tons) due to a decrease in exports. This led to a decline in stock prices. As for the decision to temporarily lift the ban, it is mainly due to the threat of oversaturation of the domestic Russian market. Several refineries had to artificially, and not because of repair work, reduce the volume of oil refining and gasoline production.
“Now production exceeds demand, albeit not by much,” says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation. – This small shed created a problem of overstocking: since Russia does not have a strategic storage facility for finished petroleum products, gasoline was sent to fuel depots and ports, where it settled as “dead weight.” There is simply nowhere to put it. For example, at the Kirishi Oil Refinery in the Leningrad Region there was no repairs, the enterprise was not damaged by drone attacks, nevertheless, in March it was forced to reduce gasoline production by 27% compared to January. And if you do nothing, if you extend the embargo, the entire oil refining industry will follow the same path.”
It is also important to consider: today the exchange price of gasoline is significantly lower than what it was at the peak of the fuel crisis in 2023. Accordingly, MK’s interlocutor believes, a certain increase is quite acceptable for the government. Moreover, the relevant departments have a lot of tools to de facto keep prices under control — this is the amount of the excise tax, the damping surcharge, and unspoken agreements with commodity companies. Oil workers were probably convincingly asked to maintain significant volumes of supply on the exchange under any circumstances, regardless of whether the decree lifting the export ban came into force or not.
“The authorities will monitor the situation manually, this is being done directly by the “new old” Deputy Prime Minister Alexander Novak,” notes Yushkov. – If necessary, if the price goes up rapidly, the embargo will be introduced again, without waiting for the milestone date of June 30. Manufacturers understand this and are absolutely not interested in any races. They should now think not about exports (especially since gasoline brings in less export profit than diesel and fuel oil), but about presence on the market with maximum volumes of petroleum products. As for retail, the pricing mechanisms there differ significantly from those that have developed in the wholesale sector. Motorists should not be afraid: the lifting of export restrictions will have virtually no effect on prices at gas stations.”
The temporary nature of the decision indicates that the departments will continue to keep their finger on the pulse and, if necessary, will cut off supplies again, says Alexander Shneiderman, head of the sales and customer support department at Alfa-Forex. According to him, the goals of the temporary export ban have been largely achieved. Firstly, in April, stock market quotes for gasoline were reduced by 5-15%. The previous growth dynamics are no longer observed.
Secondly, according to Deputy Prime Minister Alexander Novak, due to restrictions on the export of products, the market is oversaturated, and it is necessary to get rid of the surplus. However, the withdrawal will last only a month — so that a physical shortage does not arise again, and with it a rise in prices, as in 2023.