The situation regarding fuel availability at petrol stations (PS) is gradually normalizing. Some queues still persist in certain areas, but there is no perceived shortage of gasoline, and certainly not of diesel, which had not been an issue in most regions even at the end of summer. The measures taken by regulators to stabilize the market have proven effective, and fuel consumption in Russia has begun to decline.
Demand for gasoline is decreasing after the holiday season, while diesel fuel (DF) demand is diminishing as agricultural work concludes. Logically, prices at petrol stations should have started to decrease slightly. This was the case in mid-September; however, by October, the increase resumed, first for gasoline and then for diesel. Notably, the fuel prices are rising at the network petrol stations of major oil companies, which had previously suppressed price increases during August and September, maintaining them at the lowest possible levels.According to the Moscow Fuel Association (MTA), in the capital and surrounding areas, gasoline grades AI-92 and AI-95 have increased in price by more than 1 ruble over the past two weeks, while DF has risen by 40 kopecks. During the week of October 6 to 12, fuel prices increased only at the petrol stations of vertically integrated oil companies (VINKs) that control the entire oil production cycle—from exploration and extraction to refining and retail sales. Data for the entire country from Rosstat for the past week is not yet available; it will be released on Wednesday evening. Moreover, Rosstat does not provide a breakdown by different petrol station networks, only publishing data on price dynamics. However, the agency has already recorded a resumption of price increases for gasoline since the end of September. In August and September, the largest contribution to the retail fuel price increase came from independent petrol stations, which are not owned by major oil companies. These independently owned stations represent over half of all petrol stations in Russia and are mainly concentrated in the eastern part of the country. However, they account for less than half of total fuel sales.
In August and September, independent petrol stations were most frequently closed due to fuel shortages. These stations lack the capacity to maintain large reserves of gasoline and diesel, as well as a solid financial "safety cushion" to weather periods of unfavorable market conditions.
It is no surprise that this is where the highest price increases for gasoline and diesel have occurred. To this day, the price difference for the same grades of fuel between independent petrol stations and VINK stations can reach up to 40 rubles, sometimes even more.
Fuel shortages for gasoline, and especially for diesel—issues that had not been present in most regions even at the end of summer—are not being felt now.However, prices are increasing at network petrol stations of VINKs. This means that the minimum price threshold for fuel is rising, and, correspondingly, the average price level will also increase.
Nonetheless, as noted in a conversation with "RG" by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and a member of the expert council of the "Petrol Stations of Russia" contest, the increase in prices affected by inflation remains unaltered. Thus, the adjustments at the petrol station forecourts of oil companies are an entirely normal process. The price levels at independent petrol stations remain significantly higher than those at VINK stations.
Furthermore, as Sergey Tereshkin, CEO of Open Oil Market, points out, the peak of nationwide gasoline demand occurs during warm weather, gradually declining with the onset of autumn. However, there is nuance here: economic activity is concentrated in cities, where, with the end of the holiday season, fuel usage rises, impacting prices.
The majority of gasoline demand is also concentrated in large cities, which suggests that the risk of fuel price increases will persist, according to Tereshkin. Moreover, the overall market balance remains fragile considering the repercussions of unscheduled refinery repairs. Diesel prices are traditionally influenced by the transition from summer to shoulder and winter diesel (which are more expensive). Therefore, an acceleration in diesel price increases is likely to occur in the second half of autumn and early winter.
Additionally, fuel imports may have influenced price dynamics. Managing Partner at NEFT Research, Sergey Frolov, believes that the share of imports in gasoline consumption in Russia is currently quite significant. The economics of imported supplies are primarily negative, thus companies are compelled to raise prices to reduce their losses.
Currently, the demand for gasoline is decreasing after the holiday season, while demand for diesel is declining as agricultural work comes to a close.As for diesel, there is no such dependence. Moreover, experts agree that even a resumption of diesel exports from Russia will not negatively impact its retail price. Russia produces significantly more diesel than the domestic market requires; it is no coincidence that diesel remains the primary exported product from our refineries.
Tereshkin clarifies that regulators have approved the shipment of the first 500,000 tons of diesel to international markets, which is just over 1% of the annual diesel export volume as of 2022. It is unlikely that these volumes will impact the market significantly, even accounting for partial withdrawal of production capacities.
According to Frolov, traditionally, diesel production in Russia exceeded domestic consumption by about two times. Currently, this ratio has narrowed; however, to prevent an oversupply at several refineries and a resultant decrease in oil processing capacities, the government has opened up exports. This would have occurred even without the agreements reached between the presidents of Russia and the USA, the expert believes.
In Gusev's opinion, in this year's situation, where the world is facing a fuel crisis, numerous measures have been implemented in Russia to stabilize the market and contain gasoline and diesel prices. Without these measures, the increases at petrol stations could have been significantly more severe. However, as a result, after the use of non-market regulatory measures, reducing price dynamics to only the balance of supply and demand is impossible. There are restrictions on price movements on the exchange, subsidies for refineries from the budget, a dampener – compensation for oil producers for supplying fuel to the domestic market at prices below export levels, and attempts to target price increases at petrol stations in line with inflation rates. These factors also influence the dynamics of both wholesale and retail prices. In the existing macroeconomic conditions, fixing retail fuel prices could be considered, according to the expert. There is nothing alarming about this; many oil-producing nations, such as Saudi Arabia, do the same.
Given the ongoing global fuel crisis and record price increases in oil, gasoline, jet fuel, and diesel in almost all countries, expecting a significant decline in prices at petrol stations in Russia alone is unrealistic. Prices may slightly drop in November and December; however, at the end of the year, oil companies begin to account for the planned increase in fuel excise taxes for the following year in their pricing. This, too, will become a factor holding back price reductions.
Source: RG.RU
