The government may ban gasoline exports

RUSSIA ENERGY / FINANCE - In Brief 28 Apr 2021 by Marcel Salikhov

The government is considering the possibility of a ban on the export of gasoline. The main reasons for the possible export restrictions are related to the anti-inflationary rush of the government, which is trying to limit the growth of consumer prices, including for oil products.

Since late 2020 the government began active use of foreign trade measures to influence domestic prices.

For petroleum products, the main instrument for stabilizing domestic prices is a damper mechanism. However, the government fears that as European countries leave lockdowns and the seasonal increase in demand for petroleum products in the summer, domestic prices may begin again. A gasoline export ban is an emergency tool that can be used when needed. The ban is not a baseline scenario. Its use will depend on a combination of external factors and internal inflationary dynamics.

In the event of a ban, the oil refining sector will be the first to suffer. According to the Russian customs (FTS), Russia exported 5.5 million tons in 2020. About 700 thousand tons to the EEU countries, the rest to other countries, primarily the Baltic states and the countries of North-Western Europe.

The main loser of a ban will be domestic downstream. First of all, refineries focused on exporting gasoline will suffer (first of all, the Kirishi refinery of Surgutneftegaz) will face the inability to supply their products to foreign markets via traditional logistics chains. For refineries that do not supply products for export, the refining economy will also deteriorate. One can expect a decrease in wholesale prices after the ban, which reduces the margin in downstream.

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