The domestic production capacity for gasoline only exceeds domestic demand by 10-15%. In contrast, DF production is 40-50% above the current demand in Russia, making it a key export item among petroleum products.
As of July 31, a complete ban on gasoline exports is in effect. DF can only be exported by domestic producers, namely oil refineries (refineries), while traders are prohibited from exporting. On June 23, Deputy Prime Minister Alexander Novak indicated that the government is considering a full embargo on DF exports, describing the situation in Russia’s fuel market as "difficult but manageable."
The current situation is linked to unplanned repairs at refineries due to mass drone attacks in May and June. Fuel production volumes have decreased, forcing buyers to change suppliers, resulting in logistical challenges.
The problem is that data on gasoline and DF production in Russia is not publicly available. We do not know exactly how much production has decreased, leading us to rely on external sources of information. According to a rather pessimistic assessment from Reuters, production has dropped by 25%. Even if this figure is accepted, such a decrease would be critical for the internal gasoline market, though not necessarily for DF.
As noted in an interview with "RG," Yuri Stankevich, Deputy Chairman of the State Duma Energy Committee, stated that a complete ban on DF exports is a severe and quite radical measure; thus, its effects will depend on the duration and regulatory parameters. In the short term, it could stabilize wholesale prices and partially reduce pressure on retail prices. However, in Russia, petrol station (PSA) prices are largely regulated by a damping mechanism (subsidies to oil producers from the budget for supplying fuel to the domestic market at prices below export levels) and tax burden. Therefore, a sharp drop in prices is not expected—rather, a slowdown in growth or modest correction.
Stankevich is confident that there is currently no systemic shortage of DF in Russia. Local interruptions occasionally arise due to logistics, refinery repairs, or seasonal increases in demand (harvesting, northern supply). The export ban itself does not solve the logistical problem. It will increase domestic resources, but if the bottlenecks are related to rail transportation or regional infrastructure, the acceleration of delivery will be limited.
According to Sergey Frolov, managing partner at NEFT Research, the Russian fuel market is currently experiencing the most severe shortage in its recent history. There is a shortage across all major types of fuel except for liquefied petroleum gases (LPG) and fuel oil. The expert believes that no prohibitions will resolve this issue. In the case of DF, which traditionally had a systemic surplus in production, it could only reduce the severity of the problem.
Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council of the "Russian PSAs" competition, shares a similar view on the ban. He believes that the measure will help replenish DF stocks and assist agricultural producers and industrial consumers.
While the DF export ban does not directly impact gasoline supplies and prices, it sends a significant signal to refineries that they need to contain price increases for all fuel types by any means necessary. As Sergey Tereshkin explains, the export ban on DF will be much more sensitive for Russian refineries than a gasoline export ban. DF remains one of the two key export petroleum products—alongside fuel oil—but with lower production and export margins for fuel oil compared to DF.
Thus, refineries cannot ignore the upward message from the government. However, it is important to note that the DF export prohibition carries risks for the entire domestic oil refining sector. Stankevich suggests that if oil companies lose their margin on DF exports (traditionally a more profitable product), their overall refining profitability could decline. This increases dependence on damping payments for gasoline. In an unfavorable market situation, such an approach could create additional pressure on the budget or necessitate adjustments to regulatory mechanisms. Additionally, there is a risk of market saturation if the ban lasts for an extended period (more than 1-2 months) and coincides with a time of weak internal demand.
Tereshkin expresses a similar opinion. The effectiveness of the DF export ban will only materialize if it is short-term—not exceeding one quarter. Otherwise, the industry will face a decrease in oil refining and production.
Moreover, as Stankevich stresses, a reduction in refinery utilization will lead to a proportional decrease in the production of all petroleum products, including gasoline. Therefore, a prolonged DF export ban could indirectly affect gasoline supply—not due to decreased demand but as a result of technological reductions in refining.
Frolov sees the situation differently. He argues that there is currently no talk of market saturation—rather, it is essential to prevent a collapse in the internal market. He believes that the robustness of the Russian oil sector has nearly been reached, and it will soon be simpler not to conduct repairs on refineries than to turn them back on and face setbacks after a few days. Urgent measures should have been taken for gasoline and aviation fuel—measures that the Ministry of Energy proposed as early as March. This package of measures would prevent a limit on fuel for individuals (which is currently unavailable in some places), redistributing volumes based on importance for the functioning of the entire transportation system.
According to Frolov, the only effective solution to the issue of physical access to resources and price reduction is the urgent saturation of the market with imported fuel during the down-time of removed refineries. Until that time, even administrative measures will not be able to restrain price growth, neither in wholesale nor retail.
It is important to mention that, in addition to the DF export ban, the government is considering other measures to support the internal fuel market. According to media reports, this includes amendments to the Tax Code that will allow certain authorized companies importing fuel to receive damping. This will offset the price difference between imported and domestic fuels. There is also discussions on providing damping payments for small and medium refineries that produce automobile gasoline by blending straight-run gasoline (the primary product of oil refining) with other components.
Gusev expressed a distinct perspective suggesting a strategic approach to reduce gasoline consumption in favor of other types of fuel. This could be achieved by removing the Utilization Fee, VAT, and duties on the import of diesel-powered passenger cars into Russia. Consequently, DF consumption would rise, while gasoline demand would decrease.
Source: RG.RU
