Russia Eases Diesel Export Restrictions

The Russian government formally lifted the ban on exporting pipeline diesel through ports while maintaining restrictions on gasoline exports.
Russia Eases Diesel Export Restrictions

On Friday, the Russian government announced the removal of ban on the export of pipeline diesel via ports, effectively lifting the majority of restrictions that had been imposed on September 21st. However, restrictions on gasoline exports remain in effect.

In terms of Russia's oil product exports, diesel holds the prominent position, with approximately 350L tonnes exported last year. Of this volume, nearly three-quarters were transported through pipelines. In 2022, Russia had exported 48L tonnes of gasoline, as per a report by Reuters.

"The government lifted restrictions on exports of diesel fuel delivered to seaports by pipeline, provided that the manufacturer supplies at least 50 percent of the produced diesel fuel to the domestic market," the Russian government said.

The curbs on fuel exports from Russia have reverberated across the global energy sector, resulting in increased fuel prices and forcing some buyers to seek alternative sources for gasoline and diesel.

The situation escalated when the European Union imposed a ban on Russian fuel imports owing to the Russia-Ukraine conflict.

In turn, Russia redirected its exports of diesel and other fuel products originally intended for Europe towards new destinations. These included countries such as Brazil, Turkey, several nations in North and West Africa, as well as Gulf states in the Middle East. Some Gulf states, boasting substantial refineries, have been re-exporting these fuel shipments.

In recent months, Russia has been contending with shortages and elevated fuel prices, with the agricultural sector, in particular, bearing the brunt of these challenges during the critical harvesting season.

Following the implementation of the ban, there has been a decline in wholesale diesel prices on the local exchange, registering a 21 percent decrease. Similarly, gasoline prices have also experienced a reduction, showing a 10 percent decline.

Despite significant wholesale price reductions, retail prices have not yet followed suit. Russian Deputy Prime Minister Alexander Novak, overseeing oil-related matters for President Vladimir Putin, has noted that the ban is showing positive effects.

On Thursday, the Federal Anti-Monopoly Service (FAS) issued directives to oil companies, mandating a reduction in the prices of oil products.

The government has also imposed a steep export duty on companies that do not produce diesel but rather export volumes acquired from the domestic market.

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