FSUOGM: Russia holds off on gasoline ban

Russia is yet to declare a ban on gasoline exports, despite recent calls from the energy ministry to do so in order to stem record-high wholesale prices for the fuel.

The energy ministry confirmed on July 30 it had filed a proposal for the government to start the necessary procedures for the ban. The government had already drafted a decree on this temporary measure in April after a previous price spike, to have it ready in the event of an emergency.

Wholesale gas prices have seen a near unprecedented rally in recent months as a result of rising international oil prices, increased summer demand for motor fuels and maintenance work at refineries. Pump prices have seen less movement, however, owing to a damper mechanism introduced in Russia’s oil taxation regime in 2018, which gives suppliers more incentive to keep costs for motorists low. Yet pump prices have still seen gains, and this is a sensitive issue for the government ahead of the September parliamentary elections.

Russian gasoline production fell to 3.35mn tonnes in July, which in daily terms is 3% lower than in June and 7% lower than in July 2020. The reason was major preventative maintenance at a number of refineries. At the same time, gasoline demand in Russia increased in July. Besides the usual seasonal factors, a growth in domestic tourism was also behind this rise.

The prices of Russia’s main blends of gasoline, Ai-92 and Ai95, reached records of RUB57,487 ($785.60) and RUB60,092 per tonne respectively on July 22 at the St Petersburg International Mercantile Exchange (SPIMEX). Prices soared on the exchange during the month despite gasoline producers distributing more fuel on the platform than recommended by the energy ministry and the Federal Antimonopoly Service (FAS). Current regulations require refiners to sell at least 11% of their gasoline on the exchange, although during the first weeks of July the share was 28%, according to Deputy Energy Minister Pavel Sorokin.

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