On July 8, Russia imposed a ban on the export of diesel fuel, the last petroleum product that had previously avoided embargoes. Just a week prior, a bill was passed that aimed to address the issue of fuel shortages and rising gasoline prices. Small refineries were granted permission to produce Euro-3 standard fuel, while larger facilities were given extended modernization timelines and financial support for reconstruction. Importers were also incentivized, as they were eligible for dampening payments for the first time. Experts believe some measures, such as stimulating imports, are delayed or targeted, addressing issues in specific regions or networks of gas stations. Amid the crisis, this is the right time to allow prices to rise, strictly limit gasoline supply, and cancel the dampening mechanism, but the authorities distrust the market mechanism and prefer to spend budgetary funds. Forbes investigated how much money refineries will receive, where Euro-3 fuel will be sold, and whether these measures will help resolve the crisis. The intense struggle of Russian authorities against the fuel crisis has been ongoing for several months. On April 2, 2026, ahead of the seasonal increase in fuel prices, the government imposed a complete ban on gasoline exports until the end of July, with exceptions for supplies under intergovernmental agreements. The decision was explained by the rise in global oil and petroleum product prices due to the conflict in the Persian Gulf. At that time, the price increase was temporarily halted. By April 2, the cost of a ton of AI-92 had decreased by 4.8% from a peak of 68,504 rubles registered on March 24, falling to 65,196 rubles, while the price of a ton of AI-95 dropped by 3.4% to 70,031 rubles compared to the peak of 77,483 rubles on March 24. However, the effects of the export ban did not last long. Supply decreased due to drone attacks on refineries. By May, according to Rosstat, which does not provide absolute figures for production, the output of petroleum products had fallen by 13.5% month-on-month. Producer prices for AI-92 rose by 0.8% in May compared to April, and by 13.2% compared to May 2025. The price of AI-95 also increased by 0.8% compared to the previous month and by 12.7% year-on-year. In retail, the weekly increase in prices for a liter of AI-92 accelerated. From April 27 to May 4, it rose from 63.53 rubles to 63.59 rubles, while from May 26 to June 1, the increase was 0.4%, with the price climbing from 63.89 rubles to 64.17 rubles. The cost of AI-95 also grew: from 0.1% from the end of April to May 4 (from 68.99 rubles per liter to 69.01 rubles) to 0.5% from May 26 to June 1 (from 69.46 rubles per liter to 69.78 rubles). During the week of June 16 to 22, the price of AI-92 soared by 3.2%, from 65.41 rubles to 67.54 rubles, while AI-95 increased by 2.9%, from 71.11 to 73.20 rubles. Although during the week from June 23 to 29, the price increases slowed: retail prices for AI-92 rose by 1.7% to 68.76 rubles per liter, and for AI-95 by 1.6% to 74.38 rubles per liter. The cause of the price increase was a shortage of gasoline and diesel fuel that emerged in many Russian regions at the end of May. Long lines formed at gas stations, and local authorities nationwide began to limit fuel sales. On June 28, Russian President Vladimir Putin publicly acknowledged the fuel shortage, describing it as "non-critical." **Lower Quality Gasoline** On July 8, the government imposed a ban on the export of diesel fuel, reported Deputy Prime Minister Alexander Novak during a meeting with Putin and government members regarding the situation in the fuel market. Novak noted that in July Russia would begin importing petroleum products and that the government had postponed several refinery repairs to later dates. Previously, on June 24, the State Duma passed the government’s bill on amendments to the Tax Code in the final reading. The decree included a comprehensive set of measures aimed at combating the fuel deficit. On July 4, President Vladimir Putin signed the law. The bill allows producers to mix straight-run gasoline (naphtha) and other components to obtain high-octane fuel. The resulting Euro-3 gasoline will be treated as high-quality Euro-5 fuel, and those producing it will receive benefits equivalent to other suppliers, despite the fact that the sulfur content is 15 times higher than that of Euro-5 – 150 mg per kilogram of fuel. On July 2, Prime Minister Mikhail Mishustin signed a resolution allowing refineries and oil depots to produce Euro-3 class gasoline and diesel fuel for the domestic market until the end of 2026. The beneficiaries of the reduction in gasoline environmental standards could be small refineries, says Sergey Selin, head of market analytics at the SiAla agency. According to him, sulfur is removed from petroleum products at hydrocracking facilities, which are available at large refineries, as significant volumes are required for their operation: ranging from hundreds of thousands to over a million tons of gasoline per year. Such facilities are not available at small refineries in northern Russia, and even larger ones in the south, built decades ago. They can only produce Euro-3. "The equipment operates perfectly on it," says Selin. Maxim Shevyrenkov, head of the raw materials analysis center at the Institute for Energy and Finance (IEF), believes that the reduction in gasoline environmental standards combined with restrictions on fuel sales at gas stations will become effective measures to alleviate the deficit, especially in regions with relatively small fuel storage capacities. He states that the negative environmental impact from using such fuel will be relatively negligible. According to Stanislav Mitrakhovich, an expert at the Financial University and the National Energy Security Fund, a relatively simple reconfiguration of production processes at refineries allows for the production of more Euro-3 gasoline. "This fuel is not of the highest quality, not the most environmentally friendly for modern engines, but generally it works quite well," he says. It is likely that most Euro-3 will be sold near production sites—in northern regions and the Krasnodar Territory, says Selin from SiAla. He notes that we are not talking about large volumes, and during periods of increased demand for this gasoline, supply may not suffice for other regions. The production of such fuel is not a panacea, but merely a temporary solution to the deficit problem. Many engines currently in use were designed for Euro-3, so it is unlikely to cause them harm, adds the expert. However, auto service centers are already seeing an increase in cases of engine damage. The number of inquiries increased by approximately 10-15% just in June, reported Forbes co-owner of the VR Auto aggregator for tech centers, Mikhail Kozhanov. He noted that all categories of motorists are affected, from owners of luxury brands to those with domestic and Chinese models. "Most modern cars are designed for Euro-5 compatible fuel, but in reality, it is increasingly common to use Euro-4 or Euro-3, leading to component failures of the engine, filters, plugs, and injectors. There is an issue, and the number of inquiries is growing and will continue to increase; not all vehicles react immediately. Failures in fuel injection systems can manifest after several poor refuelings," Kozhanov states. **Support for Refineries** Allowing the production of Euro-3 gasoline will partially resolve the deficit issue and help small producers increase fuel output. Large enterprises were also taken into account. The agreements on the reconstruction of refinery capacities have been extended until December 31. This applies to those plants that signed modernization contracts with the Ministry of Energy before June 1, 2019, for at least 60 billion rubles and were required to start operations by January 1, 2026, but were unable to do so. As early as 2019, the Ministry of Energy entered into several agreements with major oil companies that allowed them to recover the excise tax on crude oil under one of two conditions: either the share of class 5 gasoline must be at least 10% of the refining volume, or investments in modernization exceed 60 billion rubles from July 1, 2014, to January 1, 2026. The new law raises the minimum investment threshold for modernization from 60 billion to 100 billion rubles. Oil companies that have signed modernization agreements with the Ministry of Energy receive a tax deduction on crude oil, known as “reverse excise tax,” says Sergey Tereshkin, general director of the Open Oil Market fuel marketplace. Essentially, this is a subsidy calculated using a complex formula based on the volume of crude processing. Since 2021, he explains, it has also included an investment surcharge of 30% of the reverse excise tax. However, until now, only those companies investing in new processing units totaling at least 60 billion rubles could rely on it. Now, the threshold has been raised to 100 billion rubles. It is possible that this sum will account for funds for restoring technological units that have recently undergone unscheduled repairs, says Tereshkin. Kozhanov from Open Oil Market explains that the reverse excise is usually received by large refineries, typically part of vertically integrated oil companies (VINKs), which have the resources to introduce secondary oil processing units. In 2025, such refineries received 2.39 trillion rubles, of which nearly 1.3 trillion rubles were attributed to reverse excise and 170 billion rubles—investment addition, Tereshkin notes. **Support for Importers** Another measure to overcome the deficit has been imports. On July 1, Reuters, estimating summer gasoline consumption in Russia at 110,000 tons per day, reported that at least 60,000 tons of gasoline had already been shipped from India to Russia. Kazakhstan, according to the agency, agreed to supply Russia with 50,000 tons of gasoline in July and August. Reuters also indicated that Moscow plans to import 400,000 tons of gasoline monthly from various countries, including Belarus, which reportedly tripled its supplies to Russia to 70,000 tons in the first half of June compared to the same period in May. To stimulate imports, under the new law, companies that sell fuel produced abroad in Russia will be eligible for dampening payments for the first time. The list of sellers will be determined by the government. The dampening mechanism compensates for the price difference of fuel within the country and abroad for producers and importers. If the export price of fuel is higher than domestic prices and exporting becomes more profitable than supplying to the domestic market, the government compensates producers for this difference. Conversely, in a negative scenario, companies must pay into the budget. For importers, authorities compensate the difference between external and internal prices. The dampening for producers is calculated based on the difference between actual external prices and fixed internal prices. This year, the fixed internal threshold for AI-92 gasoline stands at 62,300 rubles per ton, while for diesel, it is 58,950 rubles. This same threshold will apply for importers, with the distinction that the actual prices in EAEU countries will be taken as the external indicator, explains Tereshkin from Open Oil Market. For gasoline produced in other countries, the law states that the amount of dampening payments will be determined by the Federal Antimonopoly Service (FAS) based on the indicative price of AI-92 gasoline in India and the cost of transporting it to Russia. According to Tereshkin, the price of gasoline in the Indian market will certainly not be lower than Russia's, given that global prices have not yet returned to February 2026 levels. According to FAS data, the average alternative export price for AI-92 gasoline rose from 57,976 rubles per ton in February to 98,897 rubles per ton in May 2026. This figure is calculated based on European prices, warns Tereshkin, though when assessing prices in Asia, the situation is unlikely to change significantly. For fuel importers from the Eurasian Economic Union (EAEU), which includes Belarus, Kazakhstan, Kyrgyzstan, and Armenia, the compensation coefficient for the imported fuel volume is higher than for Russian fuel producers: 0.9 compared to 0.68. Furthermore, payments will be backdated to June 1, 2026. From this date forward, the volume of imported gasoline from Belarus and Kazakhstan will be multiplied by 0.9 for calculations, meaning the higher the imports, the greater the dampening payment amount will be, explains Tereshkin from Open Oil Market. **From Exchange to Gas Stations** Another measure taken by the government has been the reduction of the mandatory sales norm at exchange auctions from 15% to 10% of production volume for manufacturers. This norm will be in effect from July 1 to September 30, 2026. According to Shevyrenkov from the IEF, the reduction in norms will allow large oil companies to use the fuel that is not sent to the exchange at their own gas stations. As VINKs do not have enough gasoline to meet their network needs, it has been decided to sacrifice some independent gas stations that purchase fuel on the exchange, Selin adds. Tereshkin from Open Oil Market believes that reducing exchange sales norms is an incorrect decision. He argues that it will make gasoline and diesel less accessible for independent gas stations, especially in regions where there aren't enough large company gas stations. The Federal Antimonopoly Service has also engaged in addressing fuel issues. On July 6, it reported that its Moscow Oblast department had launched cases against six independent market participants who simultaneously raised gasoline and diesel prices at their networks, and the Orenburg department initiated similar cases against three independent market players. **All Too Late** So far, the measures introduced have not yielded results. According to the latest data from Rosstat, from June 29 to July 6, the price increase for gasoline accelerated. The price for AI-92 rose by 2% from the previous week to 70.21 rubles per liter; AI-95 increased by 2.3% to 76.19 rubles per liter, and diesel fuel prices went up by 3.4% to 87.76 rubles. This time, Rosstat did not detail which region experienced the highest price increase. Last week, it was Sevastopol, where gasoline prices surged by 30%. However, concerning a sharp rise to 197 rubles per liter for AI-95 in the city, Putin was informed on July 8 by Sevastopol's head, Mikhail Razvozzhaev. Stimulation of fuel imports should have been carried out a couple of months earlier when the risk of unscheduled technological downtime at refineries was evident, believes Tereshkin from Open Oil Market. Such measures could have prevented the queues at gas stations, he states. Given the current market situation, Selin from SiAla suggests that this might be a convenient time for transitioning to free pricing on the St. Petersburg Exchange and at gas stations, along with discontinuing the dampening mechanism, as this would stimulate commercial fuel imports and quickly resolve the internal market deficit. Shavyrenkov from IEF believes that the best way to combat the frantic demand for fuel would be to impose restrictions that authorities should introduce at all gas stations across the country. Source: Forbes