MOSCOW, Oct 6 – Russia’s government announced on Friday that it has lifted a ban on pipeline diesel exports via ports, removing the bulk of restrictions that were put in place on Sept. 21. While restrictions for gasoline exports remain in place, this move signifies a significant step toward normalizing fuel exports for Russia.
Diesel represents Russia’s most substantial oil product export, with approximately 35 million tonnes shipped last year, of which nearly three-quarters were transported via pipelines. In addition to diesel, Russia exported 4.8 million tonnes of gasoline in 2022.
The government’s statement explained, “The government lifted restrictions on exports of diesel fuel delivered to seaports by pipeline, provided that the manufacturer supplies at least 50% of the produced diesel fuel to the domestic market.”
The export restrictions implemented by Russia, the world’s top seaborne exporter of fuel just ahead of the U.S., have led to elevated global prices and caused some buyers to seek alternative sources of gasoline and diesel. Following the European Union’s ban on Russian fuel imports due to Moscow’s actions in Ukraine, Russia redirected Europe-bound exports of diesel and other fuels to countries such as Brazil, Turkey, various North and West African nations, and Gulf states in the Middle East, which then re-exported the fuel.
The lifting of restrictions is particularly critical for Russia, as it has been grappling with shortages and high fuel prices in recent months, especially affecting farmers during the harvesting season. Since the ban’s introduction, wholesale diesel prices on the local exchange have fallen by 21%, while gasoline prices have decreased by 10%.
While these reductions have not yet translated into a similar scale of retail price decline, Russian Deputy Prime Minister Alexander Novak, President Vladimir Putin’s point person on the oil industry, has indicated that the ban has begun to yield positive results.
Additionally, the Federal Anti-Monopoly Service (FAS) has issued instructions to oil companies, directing them to lower oil product prices. Simultaneously, the government has raised the fuel export duty for resellers, who do not produce the fuel, from 20,000 roubles to 50,000 roubles per tonne, while reinstating subsidies for oil refineries starting from October 1. These measures aim to curb attempts by resellers to stockpile fuel for export once the current restrictions are lifted, preventing them from exporting fuel under the guise of other products.
This significant development is expected to alleviate the strain on Russia’s domestic fuel market, stabilize fuel prices, and support the country’s energy sector.