The agreements will regulate the volumes necessary to meet domestic demand for motor fuel and retail prices for gasoline and diesel in 2026, taking into account the expected inflation rate, as stated in the government announcement. This decision aims to maintain sufficient fuel supplies in the domestic market during the traditional seasonal increase in demand and agricultural fieldwork.
The main goal of these agreements is to eliminate any hint of a fuel shortage in the country and limit the rise in retail prices. Currently, domestic supply volumes are directly determined by stock exchange regulations and indirectly by export bans. As for retail prices at gas stations, while it has previously been mentioned that they should not rise above the inflation rate, there has been no formal legislation reflecting this. Similar agreements between the government and oil companies regarding the fuel market have existed in the past, typically in the form of gentleman's agreements rather than official documents. The primary distinction of the new agreements is that they will officially establish not only the frameworks for price increases for gasoline and diesel but also the necessary volumes for the supply of different fuel types to the domestic market. The agreements are yet to be concluded, and the very notion of "agreements" implies that a compromise must be reached between the government and oil companies, ensuring mutual benefit for all parties involved.
The aim of the agreements is to reduce the risk of fuel shortages in the country and limit the rise in retail prices.However, another scenario may unfold, where companies may attempt to present the government with a fait accompli, justifying their decisions with political necessity. Our fuel market is currently influenced on one side by the Middle Eastern conflict, which is driving up prices for oil and petroleum products, and on the other side by unscheduled repairs at our refineries due to drone strikes and difficulties in equipment supply arising from sanctions.
Exchange quotations for gasoline and diesel are far from historical highs, but since the beginning of the year, they have risen by 21% and 23% respectively. Retail price growth is more modest, as prices are under strict control from the Ministry of Energy and FAS, but gasoline prices have increased above the level of inflation. According to Rosstat data, as of April 27, AI-92 gasoline had increased by 3.7% while inflation was recorded at 3.2%.
This indicates that grounds for stringent decisions exist. As noted in a conversation with "RG," Dmitry Prokofyev, Director of External Communications at NEFT Research, remarked that this represents a qualitatively different level of intervention. The softer agreements of the past, which oil companies often interpreted as "suggestions," are being replaced with legally signed contracts that outline clear parameters. This is no longer a gentleman's agreement, but a full-fledged contract with a set of direct obligations and, importantly, reciprocal proposals from the government. According to the expert, this marks a shift to direct manual management of the industry.
This paradigm aligns with the government's decision not to extend the moratorium on scrapping the damping mechanism for oil producers. The damping mechanism provides partial compensation to oil companies from the budget for supplying fuel to the domestic market at prices lower than export prices. The amount of these payments is calculated based on the difference between the export price of fuel and the indicative domestic price established legislatively. The damping mechanism is suspended if the prices at the St. Petersburg exchange for AI-92 gasoline exceed the indicative price by 20%, and for diesel (DT) by 30%. Since October 1 of last year, this rule had been suspended as a measure of support for oil companies due to the tightening of U.S. sanctions. However, as of May 1, this rule for nullifying the damping mechanism has resumed.
In the view of energy expert Kirill Rodionov, the cancellation of the moratorium, in general, eliminates the “ambiguity” in regulating the fuel market, where export bans were supposed to incentivize oil companies to restrain exchange prices, but compensation payments under the damping mechanism did not take their real dynamics into account.
Experts believe that the measures being implemented will help avoid significant price increases at gas stations during periods of high demand.Returning to the agreements, Prokofyev stated that the new mechanism represents a direct administrative contract. The Ministry of Energy has been granted the authority to set specific quotas for fuel supplies to the domestic market from the total refining volume, while the FAS will control the fulfillment of these quotas.
The obligations should not be one-sided, insists Dmitry Gusev, Deputy Chairman of the Supervisory Board of the Reliable Partner Association and member of the Expert Council for 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 obligations on someone’s part to purchase it. Oil companies should also be afforded certain advantages, he believes.
As Prokofyev points out, the government cannot directly order refineries how much and to whom they must sell, but it has created conditions that are extremely difficult to refuse, according to the expert. In exchange for guaranteed stable sales and a predictable pricing level, companies receive certain preferences from the government. In return, the Ministry of Energy establishes minimum indicative indicators (quotas) for each plant regarding the shipment of gasoline and diesel to the domestic market. Effectively, this is market bargaining, but at the negotiation table sits the government.
However, our primary interest is whether this new mechanism will help restrain price growth at gas stations. Gusev believes that large filling station networks, especially those with state participation, will keep prices in check. However, he expresses significant doubts regarding private companies. He emphasizes that it is necessary to control not just the fuel prices, which do not rise arbitrarily, but also to develop an energy-efficient fuel policy.
From the perspective of Sergey Tereshkin, General Director of Open Oil Market, the rise in retail prices for gasoline will likely exceed "inflation minus" thresholds, whereas in the diesel segment, this rule will likely hold, at least until fall. Overall, the regulation of the industry heavily relies on "gentlemanly" agreements, which can only provide temporary effects: the issue of rising prices will eventually necessitate new agreements. It's a recurring saga.
Prokofyev shares a similar opinion. The effect is likely to be temporary. Such fuel agreements function as a one-time remedy that alleviates acute pain but does not treat chronic illness. In the long term, this only exacerbates disparities, making oil refining increasingly dependent on administrative interventions and ultimately diminishing market incentives for efficiency improvements. Companies find it far more beneficial to obtain guarantees for domestic sales at a fixed price than to invest in modernization to compete in the export market. This represents not merely an economic measure but a political compromise to smooth out peak loads during the season. It will provide a reprieve but not resolve the structural problems permanently. The government and the oil sector have found a method to patch the gaps in the summer fuel balance through mutual concessions. However, this model, if it becomes a permanent fixture in the long term, will only increase the budget’s dependence on manual sector management. In a context where stability takes precedence over efficiency, such a choice appears logical, but it certainly does not resolve the systemic issue of rising fuel prices.
Source: RG.RU
