However, an increase in exchange prices cannot fail to influence fuel costs at gas stations. Filling stations purchase fuel either through exchanges or at oil depots. Large networks, owned by major oil companies, can procure fuel directly from refineries (refining plants), though even they do not always do so. Since the beginning of the year, retail prices have only increased by 2.4% for gasoline and 1.6% for DF, which is below the country's average inflation rate of 2.59%. Notably, the price increase for gasoline has noticeably accelerated since early March.
Currently, amid the Middle Eastern crisis, there is a significant flow of news regarding soaring fuel prices abroad. Primarily, this refers to the United States, where prices have increased by 35%. Retail prices have risen more than wholesale prices.
Fuel prices have also increased across Europe and in China, which is not surprising given that they are oil importers, and current quotations for oil are adamantly refusing to fall below $95 per barrel. What is concerning is that the increase in wholesale prices in Europe averages 9-10%, and in China, 11-12%, which is lower than in Russia. This implies that they are importing oil—Germany is purchasing it from us—while wholesale fuel prices are rising more sharply in Russia.
As noted in a discussion with "RG" by Yuri Stankevich, Deputy Chair of the State Duma Committee on Energy, the rise in exchange prices for fuel in Russia since the beginning of the conflict in the Persian Gulf is primarily linked to the export alternative (the price of our fuel when supplied abroad). This effect is exacerbated by seasonal increases in demand and supply constraints (refinery maintenance, logistics).
According to him, the EU's high tax component in fuel prices smooths out raw material fluctuations, and in China, prices are largely regulated by the government. In Russia, the market is more sensitive to export dynamics, and the damping mechanism (subsidy for oil companies from the budget for supplying fuel to the domestic market at prices lower than export prices) is currently not fully compensating for the rise in external prices.
The Middle Eastern crisis is indirectly impacting us through global oil and petroleum product prices. There are no physical risks for domestic supply, but a premium for geopolitical risks is factored into the price, Stankevich specifies.
The rise in stock prices for gasoline and diesel fuel has not yet had a significant impact on their prices at automotive filling stations.However, it remains unclear why wholesale prices are increasing more sharply in our country. The tax component in fuel here is no less than in some EU countries, and state control over the fuel market is at least as strict as in China, although there, prices are indeed set by the government.
Sergey Tereshkin, General Director of Open Oil Market, believes it would be a mistake to link the rise in exchange prices to the consequences of the Middle Eastern conflict. Rather, it reflects the oil producers' desire to compensate for the losses they have incurred over recent months. In January, payouts for the damping mechanism amounted to only 16.9 billion rubles, which is 90% less than the previous year; in February, oil companies even had to pay an additional 18.8 billion rubles to the budget. With reduced subsidies, the profitability of oil refining decreases, raising the incentives for oil producers to increase profitability through price hikes.
However, in March, the damping mechanism will increase, and April payouts (for March results) will likely reach maximum levels for 2024, surpassing 130 billion rubles. It is unlikely that oil companies will ignore this factor.
Managing Partner at NEFT Research Sergey Frolov believes that the increase in exchange prices was inevitable under the current conditions. The market essentially faced a double hit—the increase in the mineral extraction tax (MET) due to rising global oil prices and a rise in the export alternative for fuel producers. The only mechanism that has restrained price quotations is the damping mechanism. But this temporary measure to control price increases following the tax maneuver (the nullification of export duties and an increase in oil extraction taxes, which concludes in 2024) has been made permanent. It was developed under specific macro parameters and operates correctly only within a narrow range of external and internal conditions. This is why it has to be adjusted continuously (sometimes multiple times a year). The expert believes that the only long-term solution to this issue is to restore the system of export duties while simultaneously modifying the MET calculation formula. However, he speculates that an export duty will likely be added on top of the existing mechanism.
Nonetheless, no expert expects a sharp increase in prices at gas stations. If oil prices continue to rise, exchange prices may increase further, Stankevich believes. However, retail at gas stations typically reacts more slowly and in a more subdued manner—the increase will likely correlate with inflation dynamics.
The Middle Eastern crisis indirectly impacts the Russian fuel market through global oil price quotations.Dmitry Gusev, Deputy Chair of the Supervisory Board of the "Reliable Partner" association and member of the expert council for the "Gas Stations of Russia" competition, is confident that as long as we produce our own gasoline and DF, they will be sold at prices determined by the Ministry of Energy and the FAS. However, there is a problem: a shortage of refining capacity is already being felt (though only in the future), and there are no market incentives to increase it. Once Russia is forced to import gasoline, prices will shoot up to global levels.
Tereshkin notes that exchange prices for gasoline and diesel generally follow the same logic: prices rise when fuel producers need to compensate for financial losses. This principle is currently at play, which is why prices are rising in March. However, diesel fuel production in our country is twice the demand of the domestic market, while gasoline production only slightly exceeds demand by 10-15%. Given this difference, the increase in exchange prices will reflect on retail prices for gasoline and diesel fuel.
In the Moscow region, fuel prices at gas stations increased by nearly 20 kopecks this week. Motorists have noticed the price increases at almost all owners of gas stations. Experts link this price hike to instability in the global oil market arising from the situation surrounding Iran.
According to the Moscow Fuel Association as of March 23, the price of AI-92 gasoline rose by 21 kopecks over the week, reaching 63.58 rubles per liter. The price for AI-95 gasoline also increased by the same amount, reaching 70.09 rubles per liter. The highest prices for AI-92 were found at "Gazpromneft-Center" gas stations, where one has to pay 64.57 rubles per liter, while at "Lukoil-CNP," one liter costs 64.37 rubles. Here too, the highest prices for AI-95 gasoline have been registered at 71.70 rubles per liter at the "Teboil" filling station, where one liter is priced at 71.11 rubles. Diesel fuel has seen an average price increase of 15 kopecks, currently costing 76.98 rubles per liter. The highest prices are offered by "Trans-Gas Stations" at 79.59 rubles per liter.
Price increases have been noted for several consecutive weeks, with weekly price hikes ranging around 20-40 kopecks per liter. Furthermore, price increases have been recorded at gas stations owned by all major oil companies in the capital region.
As automotive expert Igor Morzharetto stated to "RG," one should not be surprised by the rise in prices: "Price fluctuations in the oil market are directly tied to the military operations of the U.S. and Israel in Iran. They are significantly impacting both wholesale and retail markets. However, in Moscow, these fluctuations are minor. The government tightly controls the market, so abrupt price jumps are not expected. Meanwhile, inflation remains in play, with expectations of it hovering around 5-6% this year. Thus, by the end of the year, AI-95 could rise to 72-73 rubles."
Additionally, springtime fuel price hikes are quite normal due to increased demand. Economic activity in the Moscow region is picking up, particularly with agricultural work increasing, construction projects waking up, and city dwellers taking their cars out more frequently in good weather, such as driving to their summer houses.
Source: RG.RU
