Surprise: Russia reneges on diesel ban
Just two weeks after the announcement, Russia removed most of its ban on diesel exports, while maintaining the ban on gasoline. Was the ban a geopolitical move or an internal necessity?
Just two weeks after the announcement , on September 21, Russia today announced that it had lifted the ban on the export of diesel fuel (or diesel) by sea. Restrictions remain on the sale of petrol abroad, of which Moscow is however not a very significant exporter: last year it exported 4.8 million tonnes.
HOW MUCH DOES DIESEL MATTER FOR RUSSIA
Diesel, by contrast, is the country's main exported oil product, with around 35 million tonnes in 2022, most of which is traded via pipe. Eurasian nations such as Kazakhstan and Kyrgyzstan (either directly bordering Russia or landlocked) were already exempt from the ban .
On news of the Russian change of heart, the price of Brent crude oil, the international reference contract, fell slightly to 84.01 dollars per barrel.
Since the European Union and the United States banned imports of refined petroleum products from Russia, in retaliation for the invasion of Ukraine, Moscow has redirected sales of diesel and other fuels towards Turkey, North Africa, Brazil and the Gulf countries (the latter purchase Russian fuel to re-export them).
RUSSIA'S REASONS
In September the Kremlin declared that the ban on diesel exports would be temporary and aimed at containing the increase in energy prices at home; increase which has particularly affected farmers – diesel is also used as fuel for agricultural machinery – during the harvesting season.
From the announcement of the ban to today, Russian diesel prices have fallen by 21 percent and petrol prices by 10 percent. The anti-monopoly watchdog said on Thursday it had ordered national oil companies to cut prices of petroleum products. While today the government raised the fuel export tariff for retailers from 20,000 rubles per ton to 50,000 rubles (about $495); he also reinstated subsidies to crude oil refineries.
THE NEW RULES
The new rules, according to Kpler's calculations , should make it possible to export 90% of the volumes prior to the ban , i.e. approximately 630,000 barrels per day. Oil refiners, however, will be obliged to keep at least 50 percent of their diesel production in Russia.
INTERNAL NEED OR POLITICAL PRESSURE?
The Kremlin officially presented the ban on diesel exports as a measure dictated by internal economic needs; several analysts, however, have interpreted it as a means of political pressure on the West and in particular on Europe, where the inflation rate is high and stimulated by high energy prices.
First of all, the timing of Moscow's announcement was suspicious: the refined products market is in a tight situation, and is therefore sensitive to initiatives to limit supplies. Furthermore, the official Russian justification was not convincing because – according to the International Energy Agency – the country's refineries produce approximately double the diesel needed to satisfy domestic demand and usually export half of their annual production.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/russia-revoca-divieto-esportazione-gasolio/ on Fri, 06 Oct 2023 11:06:35 +0000.