Russia has announced a six-month ban on gasoline exports starting March 1. This measure aims to ensure an ample fuel supply to meet domestic demand, especially in anticipation of scheduled maintenance activities at refineries.
Exemptions to the ban
Exemptions from this export restriction include member states of the Eurasian Economic Union, along with Mongolia, Uzbekistan, and two Russian-supported separatist regions of Georgia – South Ossetia and Abkhazia.
Motivation behind the export ban
The Russian energy ministry foresees a period of “zero growth” in gasoline and diesel retail prices for at least the next two months. The ban on gasoline exports serves as a preventive measure to curb potential price hikes on the domestic market. This becomes crucial ahead of seasonal refinery maintenance and increased demand, notably from farmers gearing up for agricultural activities and the upcoming summer driving season.
Last year, Russia banned gasoline exports between September 21 and November 17 to stem rising prices on its domestic market.
Price pressures
Many Russian refineries, including the prominent Lukoil's NORSI oil refinery in Nizhny Novgorod, have faced disruptions due to drone attacks or unforeseen maintenance work. These incidents have led to a reduction in fuel production. Consequently, wholesale fuel prices in Russia have witnessed an uptick since the beginning of the year.
According to prices on the St Petersburg International Mercantile Exchange (SPIMEX) as of February 22, 92-octane gasoline had surged by 21.3%, while 95-octane gasoline had seen a significant increase of 30.4% since January 1.
Potential impact on international markets
Since a full EU embargo took effect in February 2023, Russia has diverted its gasoline supplies mostly to African countries, replacing Northwest European supplies.
In 2023, Russia produced in total 43.9 million tons of gasoline and exported about 5.76 million tons, or around 13% of its production.
The removal of Russian supplies from international markets as a result of the export ban could mean the resumption of European fuel supplies and increasing Chinese exports.
(Inputs from Reuters)
