Moreover, as a temporary fuel importer, Russia currently bears the disadvantages of supply disruptions from the Persian Gulf countries. In conditions of supply shortages, this can impact the export of gasoline into our country. Foreign refineries will primarily aim to supply their domestic markets before sending fuel abroad, or exports may become expensive.
For instance, during the spring, at the height of the first round of hostilities between the United States and Iran, the closure of the Strait of Hormuz made it impossible to ship oil from Persian Gulf countries. India raised export duties on petrol, diesel, and aviation kerosene, automatically making them more expensive for buyers. India is considered the main potential supplier of gasoline to Russia from overseas. The higher the price of Indian petrol, the more compensation importers will need from the Russian budget.
Subsidies (the damping mechanism) are paid to oil companies for supplying fuel to the domestic market at prices below export levels.
This represents a compensation for part of the difference (a coefficient of 0.68 for petrol and 0.85 for diesel) between indicative wholesale prices (set by the government annually) in Russia and export alternatives (in Europe).
We are compelled to import fuel due to reduced output from domestic oil refineries. According to Deputy Prime Minister Alexander Novak, this situation arose due to unscheduled repairs on refineries following drone attacks. Various estimates suggest a decline in oil refining volumes of between 20 to 30%.
However, we are unlikely to purchase diesel fuel abroad, as local production is double our consumption, and exports from Russia have been prohibited since July 9. Yet, starting in July, Russia is importing gasoline, and the damping mechanism will also apply to these supplies. The coefficient for imports from EAEU countries is set at 0.9, while a separate formula through import parity (with the Indian market) is introduced for supplies from other countries. Moreover, given that the compensation is partial, prices within Russia may rise if fuel prices on global markets hit record highs.
Price increases have already touched Europe. Diesel fuel has seen the most significant rise, averaging 14% since the beginning of July, while petrol has risen by 10%. This occurred only on news of renewed tensions in the Middle East and there is yet to be a physical shortage. Prices in India did not rise in July, but since the Iran-US conflict commenced, they have gone up by 7.8%. Initially, petrol in India was already significantly more expensive than in Russia.
However, the issue is not only about the prices and availability of imported petrol but also the volume of imports. Various estimates suggest a reduction in oil refining volumes in Russia of 20 to 25%. Our country consumes around 3 million tonnes of petrol each month. A significant volume of imports comes from Belarus, with 141,000 tonnes in June. Kazakhstan may supply around 50,000 tonnes of petrol to Russia. Therefore, our need for fuel from overseas is unlikely to exceed 450,000 tonnes per month. Additionally, considering government measures (permitting a reduction in petrol quality class and production by blending) and the exit of refineries from repairs, volumes of distant imports are unlikely to exceed 300,000 tonnes. Consequently, the burden on the budget for fuel subsidies due to imports may rise slightly above 10% (considering the difference in coefficients).
As noted in a conversation with "RG" by Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and a member of the Expert Council of the "AZS Russia" competition, we are key suppliers of raw materials for all our potential fuel exporters, and the overwhelming majority of petrol and diesel will continue to be produced in Russia. Therefore, the Hormuz crisis is not expected to significantly affect internal market prices. However, should global prices for petroleum products continue to rise, this will inevitably reflect on the Russian market.
Regarding the accessibility of imports, the expert does not rule out that the supply of petrol in external markets may decrease. Nevertheless, considering that we provide the raw materials for fuel producers, it is unlikely that this will significantly impact Russia.
However, we cannot fully eliminate any potential oil deficit. According to Sergei Tereshkin, General Director of Open Oil Market, the situation in the Middle East will impact the availability of oil imports for India. Last year, India imported 262 million tonnes of oil, of which 36% (95 million tonnes) came from Saudi Arabia, Iraq, and Kuwait, countries whose export capabilities are highly dependent on shipping dynamics in the Strait of Hormuz. Additionally, 10% of supplies (26.7 million tonnes) were provided by the UAE, which can export about half of its oil via the Gulf of Oman, bypassing the Strait of Hormuz.
The volumes of potential gasoline supplies to Russia from overseas countries are too small to significantly affect its retail prices.Key foreign fuel importers to Russia include Belarus, Kazakhstan, India, and China, notes Sergey Frolov, Managing Partner at NEFT Research. Fuel is shipped to Russia by sea only from India and currently in small volumes (estimates suggest supplies were between 60,000 to 80,000 tonnes). This is negligible compared to the average monthly petrol consumption in Russia, which is around 3 million tonnes, and therefore, any influence of these supplies on the prices of petroleum products in Russia is currently out of the question. The primary mode of transport for supplies from other countries is rail, the expert clarifies.
Frolov emphasises that global gasoline quotes do not significantly affect Russia either, as domestic wholesale prices are determined by the balance of supply and demand in the internal market, while the retail price of fuel is regulated by the government.
All of these statements hold true, provided that fuel importation is not long-term, meaning domestic refineries restore their capacities within one or, at most, two months. If this does not occur, or if unplanned shutdowns of plants continue, the impact of fuel imports will accumulate, which could more seriously affect both internal retail prices and government revenue.
Waiting times at petrol stations are decreasing: The situation with gasoline is normalising in the regions
The situation with gasoline is slowly but surely normalising. As reported by correspondents from "RG" in the field, limits on fuel dispensing have been increased in several regions, and in some places, the waiting time in lines has shortened to ten minutes.For instance, in Udmurtia, gasoline supplies to municipalities have doubled, as reported by Government Chairman Roman Efimov at a meeting of the operational staff. Notably, just a month ago in Izhevsk, nearly 50 percent of petrol stations were down, with motorists waiting for hours. Now, these lines have significantly shortened. One key petrol station network has doubled its supply to the districts. Additional supplies are also flowing into the northern part of the region. Current fuel supply volumes are roughly in line with levels from July last year, with a slight excess of 7 to 10 percent to saturate the market.
The number of complaints is decreasing, but the issue remains acute outside the Izhevsk agglomeration. Therefore, priorities include reserves for school buses and heating, as well as support for emergency services.
Farmers purchasing fuel in bulk receive diesel from a single operator based on requests and quotas. The issue with fuel for agrarians should be resolved by July 20.Filling cans with fuel is currently prohibited: with 675,000 vehicles in the region, even 400,000 top-ups of petrol at 10 litres would add an extra 12,000 tonnes. This is nearly four railway trains worth - a situation that could cause a collapse.
Governor of Vladimir Region Alexander Avdeyev reported that the region has managed to stop the rise in queue lengths at petrol stations. Currently, the average waiting time is between 20 to 40 minutes. Fuel companies have increased the volume of gasoline supplies, but the specifics of how much remain unspecified. Meanwhile, the network of petrol stations has restrained price increases "within the recommended limits." The details of these limits remain unclear. According to petrol station locators, major operators sell a litre of AI-95 for 67-73 roubles. At private stations, prices can reach up to 160 roubles.
In the Vladimir region, waiting times have reduced from several hours to 30 minutes.
From July 14, gasoline supplies have also increased in the Vologda region. PJSC "LUKOIL", which controls more than 90% of the petrol stations in the region, has raised the fuel dispensing limit per individual to 30 litres, reported regional head Georgy Filimonov.
The company has cancelled technological breaks in the operation of petrol stations, maintaining them only during fuel delivery, and has increased daily dispatch volumes. Daily shipments are now saturating the market.
In Vologda, considerable efforts are being made to support drivers. As Mayor Sergey Zhestyannikov announced, entrepreneurs and volunteers are assisting residents waiting at petrol stations. For example, free hot pizza, muffins, and drinking water have been provided, with nearly 550 litres of water distributed over the course of a week.
Volunteers continue to monitor petrol stations, regulating vehicle flows, advising drivers on available stations, and assisting individuals with disabilities. Such acts of kindness demonstrate that during tough times, the community can come together.
Mayor of Cherepovets Andrey Nakroshaev reported that over the last two days, 13 fuel trucks have arrived in the city.
"Starting Thursday, a night shift of volunteers will be launched in Cherepovets - this will allow us to maintain order and assist motorists around the clock," explained the city administration leader.
City heads are striving to normalise operations at petrol stations. Overall, authorities believe the region is gradually returning to previous supply volumes, and the measures taken are effective. "Yesterday, we stopped at a petrol station in Vologda on Preobrazhensky Street. In the morning, there was no one there, and we filled up calmly," noted drivers on social media.
Our correspondent from St. Petersburg reports that in the Northern capital, the queues at petrol stations also appear reduced: drivers have started actively using services that indicate the availability or unavailability of petrol at specific stations, diversifying the flow of those wishing to refuel. Surprisingly, petrol stations in less trafficked areas are often not included in application maps: a correspondent from "RG" successfully filled up at one of these stations, with a waiting time of just 10 minutes for three vehicles. Unfortunately, the AI-95 we had intended to purchase had run out, leaving only AI-92 available, which was priced at around 65-67 roubles.
Source: RG.RU
