The Ministry of Energy and the Federal Antimonopoly Service (FAS) will sign agreements with oil companies regarding measures to stabilize and develop the domestic fuel market. This resolution has been adopted by the government. The agreements will regulate the volumes of motor fuel supply to the domestic market and retail prices for gasoline and diesel in 2026, taking into account the expected inflation rate, as stated in a government announcement. The decision aims to maintain sufficient fuel supplies in the domestic market during the traditional seasonal spike in demand and agricultural fieldwork. In other words, the goal of these agreements is to completely eliminate even the hint of risk of fuel shortages in the country and to limit the growth of its retail prices. Currently, the volumes of supply to the domestic market are determined directly by exchange norms and indirectly by export bans. As for retail prices at gas stations, it has been stated before that they should not rise above the inflation rate, but this is not officially documented anywhere. Government agreements with oil companies regarding the fuel market have existed previously, but they were typically in the form of gentlemen's agreements rather than official documents. The main distinction of the new agreements is that they are set to legally establish both the frameworks for price increases for gasoline and diesel and the necessary volumes of different types of fuel supply to the domestic market. They just need to be finalized, and the very notion of "agreements" implies that a compromise must be achieved between the government and oil companies, leading to mutual benefits for both parties. The objective of the agreements is to reduce the risk of fuel shortages in the country and constrain the rise in retail prices. However, there is also a possibility that companies may simply attempt to present the government with a fait accompli, justifying such a decision by political necessity. On one hand, the fuel market is currently affected by the Middle Eastern conflict, which is causing prices of oil and petroleum products to rise. On the other hand, there are unscheduled repairs at our oil refineries (refineries), related to drone strikes and supply issues due to sanctions. Exchange prices for gasoline and diesel are far from historical highs but have risen by 21% and 23% respectively since the beginning of the year. In retail, the increase is more modest as prices are strictly controlled by the Ministry of Energy and FAS, but the rise in gasoline prices exceeds the inflation rate. According to Rosstat, by April 27, AI-92 gasoline had become 3.7% more expensive, while inflation was at 3.2%. Thus, there are grounds for tough decisions. As noted in a conversation with "RG" by Dmitry Prokofyev, Director of NEFT Research for External Communications, this represents a qualitatively different level of intervention. The soft agreements of the past—which oil companies often interpreted as merely "suggestions"—are replaced by legally signed agreements with clearly defined parameters. This is no longer a gentlemen's agreement, but a full-fledged contract with a set of direct obligations and, importantly, reciprocal offers from the state. This signifies a shift to direct manual control of the industry, the expert suggests. This paradigm is also consistent with the fact that the government has not extended the moratorium on the nullification of the damping mechanism for oil companies. The damping mechanism is a partial compensation from the budget to oil companies for supplying fuel to the domestic market at prices lower than export ones. The size of these payments is calculated based on the difference between the export price of the fuel and the indicative internal price set by law. The damping mechanism is nullified if the prices for AI-92 gasoline on the St. Petersburg exchange exceed the indicative price by 20% and for diesel fuel (DT) by 30%. Since October 1, the previous year, this rule had been suspended as a measure of support for oil companies due to the tightening of U.S. sanctions. However, from May 1 of this year, the rule for nullifying the damping mechanism was again operational. According to energy expert Kirill Rodionov, the overall cancellation of the moratorium eliminates the "ambiguity" in regulating the fuel market, where export bans were supposed to prompt oil companies to restrain exchange prices while damping payments did not take their real dynamics into account. Experts believe that the measures being taken will allow for the avoidance of a strong price increase at gas stations during periods of high demand. Returning to the agreements, Prokofyev stated that the new mechanism constitutes a direct administrative contract. The Ministry of Energy has received the authority to set specific quotas for fuel supplies to the domestic market (from the total processing volume), while the FAS is tasked with overseeing their implementation. Obligations should not be one-sided, believes Dmitry Gusev, Deputy Chairman of the Supervisory Board of the Association "Reliable Partner" and member of the Expert Council of the "Gas Stations of Russia" competition. If there is an obligation to supply a certain amount of fuel to the domestic market, there must also be a counterpart's obligation to purchase it. Oil companies also need to be given certain advantages, he argues. As Prokofyev notes, the government cannot directly instruct refineries how much and to whom to sell, but it has created conditions that are extremely difficult to refuse, according to the expert. Companies, in exchange for guarantees of stable sales and a predictable price level, are receiving certain preferences from the government. In return, the Ministry of Energy sets minimum indicative parameters (quotas) for each plant's gasoline and diesel deliveries to the domestic market. In fact, this is market bargaining, only the government sits at the negotiation table. However, our primary concern is, of course, whether the new mechanism will help curb price increases at gas stations. Gusev believes that large fuel retail networks, especially those with state participation, will maintain prices. However, he expresses considerable doubts about private companies. He emphasizes that it is necessary to limit not just fuel prices, which do not increase spontaneously, but to build an energy-efficient fuel policy. From the perspective of Sergey Tereshkin, General Director of Open Oil Market, the increase in retail prices for gasoline will likely exceed the "inflation minus" range, while this rule will be maintained in the diesel segment—at least until the fall. Overall, sector regulation heavily depends on "gentlemen's" agreements, which can only provide temporary effects: the issue of price growth will sooner or later require new agreements. This is a series that will repeat again and again. Prokofyev shares a similar opinion. The effect will likely be temporary. Such fuel agreements act like a temporary remedy: they alleviate acute pain but do not cure the chronic disease. In the long term, this only exacerbates disparities, making oil refining even more dependent on administrative influxes and ultimately hollowing out market incentives for efficiency. It is much more profitable for enterprises to obtain sales guarantees within the country at a fixed price than to invest in modernization to compete in the export market. Before us lies not so much an economic measure but a political compromise to smooth out peak loads in season. It will provide a respite, but it will not permanently resolve structural problems. The government and oil companies have found a way through mutual concessions to patch up the gap in the summer fuel balance. However, this model, if it becomes permanent in the long run, will only heighten the budget's dependence on manual sector management. In conditions where stability is prioritized over efficiency, this choice appears logical. But, of course, it does not solve the systemic problem of rising fuel prices. Source: RG.RU