Previously, this news would have garnered considerable media attention, but it has gone largely unnoticed. Current exchange quotations have minimal impact on fuel prices in the retail market, and trading volumes have decreased by a factor of three. Just over 10% of the daily gasoline consumption in Russia goes through the exchange. Supplies are predominantly bypassing the market, focusing instead on wholesale and small wholesale segments. Final prices vary significantly from the exchange quotations. Furthermore, trading on the exchange does not increase the volumes of gasoline and diesel fuel (DF) production, with the main challenges currently related to ensuring all gas stations (GS) receive the necessary amount of fuel.
The fuel availability situation, primarily concerning gasoline, is expected to normalize very soon. Oil refineries (OR) are gradually finishing unplanned repairs and increasing production volumes. The export of gasoline and DF from Russia is prohibited, with all produced fuel destined for the domestic market. Imported gasoline has started entering the country, with the largest volumes coming from Belarus, as well as supplies from India, Morocco, and Turkey.
As of September 1, gas stations are permitted to sell fuel that does not meet the "Euro-5" environmental standard. All these measures should increase the fuel supply available in the market.
However, perhaps the most critical factor will be that September marks the beginning of the seasonal decline in gasoline demand, as the vacation and dacha traveling period comes to an end. This year, the autumn drop in demand may be more pronounced than in previous years.
As noted in a conversation with "RG" by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and member of the Expert Council of the "Gas Stations of Russia" competition, many motorists are currently opting to use public transportation whenever possible, leading them to either park their cars or minimize personal vehicle use. This trend is attributed to both rising prices and long queues at gas stations, which require time to navigate. Estimates of demand reduction due to these factors range between 10% and 30%.
According to Sergey Frolov, Managing Partner of NEFT Research, stable stabilization of the situation can be expected only after demand and consumption return to balance across all regions of Russia.
Given the measures being adopted, there is hope that by September the queues at gas stations will finally dissipate. The pressing question remains what prices this fuel will be sold at. According to Rosstat, since the beginning of the year, the price of gasoline in Russia has increased by an average of 19.4% by the end of the summer period, while DF prices rose by 18.4%. In some regions, the price increases have surpassed twenty percent or more, outpacing the average level across Russia.
The pricing mechanism is crucial here. Gusev believes that exchange trading has never been significantly related to retail, and is even less so now. However, it serves as an indicator for the market. Based on these indicators, prices rise or fall in wholesale and small wholesale, subsequently reflecting on gas station prices.
In the small wholesale sector, gasoline prices sometimes exceed exchange rates by one and a half times.In the large wholesale market, prices at refineries and major oil depots closely align with exchange rates, varying by only 1-5%. This segment primarily serves network gas stations, typically owned by oil companies. In contrast, small wholesale purchases at oil depots are mostly made by independent gas stations, industrial enterprises, and agricultural producers, where fuel costs currently exceed exchange quotations by 8-10%. Even greater discrepancies are common. This is why prices at independent gas stations (which account for more than half of the fueling stations in Russia) are higher than those at network stations.
As noted by Sergey Tereshkin, General Director of Open Oil Market, the gap between exchange prices and the over-the-counter segment has always been a common occurrence. However, this difference has become particularly pronounced: the price at which independent gas station operators purchase gasoline is now one and a half to two times higher than the exchange level.
Under new rules, all over-the-counter fuel purchase transactions exceeding 1 ton are now required to be registered on the exchange, albeit on a voluntary basis until March 1, 2027. The Federal Antimonopoly Service (FAS) will monitor price stability. If a gas station itself makes the purchase, registration is only necessary for acquisitions over 60 tons, due to the existing FAS oversight on prices at gas stations.
Thus, a price surge akin to what occurred this summer should not happen again. With decreasing demand and an increase in fuel entering the market, a slight price drop could even occur. The challenge remains that the measures taken currently do not resolve the systemic issues within domestic oil refining.
Frolov points out that even after all current refineries exit planned and unplanned repairs, the question of further systematic development of oil refining will remain. The events of this year have highlighted longstanding issues within the industry.
Tereshkin asserts that this year, unplanned refinery repairs have been a defining factor for our fuel market. Despite stabilization in the fuel market, the issue of partial capacity loss remains relevant.
In simpler terms, we need new refineries, and the production and sale of fuel domestically must be more profitable than exporting crude oil.
Gusev believes that the challenges facing our oil refining sector this year were seeded in the tax maneuver (zeroing export duties on oil and light oil products from 2024 and increasing the mineral extraction tax). As a result, the investment attractiveness of building new refineries and the sector in general has diminished.
Source: RG.RU
