Russian government lifts restrictions on diesel exports via ports
Russia has lifted a ban on pipeline diesel exports via ports, which was first imposed on September 21. Diesel is Russia's top oil product export, with around 35 million tons exported last year, and almost three-quarters of that amount was transported through pipelines. Petrol export restrictions, however, are still in effect. Following this news, global oil prices dipped slightly, with Brent futures falling 0.08% to $84.01 per barrel.
Impact on domestic market and global prices
The removal of the diesel export ban is expected to positively impact both the domestic market and global prices. Since the ban began, wholesale diesel costs on the local exchange have dropped by 21%, while petrol prices have decreased by 10%. The Russian government has also raised fuel export duties for resellers and reintroduced subsidies for oil refineries starting October 1. These actions aim to prevent resellers from buying fuel in advance for later export once current restrictions are lifted.
Russia's fuel exports amid European Union ban
After the European Union banned Russian fuel imports due to Moscow's actions in Ukraine, Russia redirected its Europe-bound diesel and other fuel exports to countries like Turkey, Brazil, many North and West African nations, and Gulf states in the Middle East. The Gulf countries, which have their own major refineries, re-export the fuel. This redirection of fuel exports has led to higher global costs and forced some buyers to look for alternative sources of petrol and diesel.
Addressing fuel shortages and high prices
Russia has been struggling with fuel shortages and high prices in recent months, especially impacting farmers during the harvest season. The government's decision to lift the diesel export ban is expected to help ease these issues but may not completely solve them. Analysts predict tax changes will be introduced soon that will eliminate most or all of the arbitrage chances for independent traders to profit from exports.
