Russia has lifted its brief diesel export ban and stated that fuel must reach its ports via pipeline for shipping to resume, bringing relief to global markets.
Importers worldwide sighed in relief. Russia had nearly stopped all diesel exports on September 21 due to domestic inflation concerns.
This pause escalated fuel prices across an already tight European market.
Global refineries are grappling with a diesel shortage. Both Russia and Saudi Arabia had reduced their diesel-rich crude supplies.
A leading analyst, Viktor Katona says the new rule will reinstate about 90% of the previously shipped volumes, equating to 630,000 barrels daily.
However, the guideline also insists that Russia retain at least half of its produced diesel.
For example, Surgutneftegas would have to keep around 55,000 daily barrels domestically.
Transneft, the pipeline operator, will start diesel loading for foreign exports under these new guidelines.
Usually, the company needs an approved export plan and shipping orders from oil firms. They were managing small, exempted diesel shipments during the ban.
Market reactions have been muted. After an initial price drop to $23.50 per barrel, diesel futures rebounded to $27.
Non-producing exporters will now face a hefty export duty, pegged at almost $500 per ton.
Moreover, Russia is reinstating refinery subsidies to balance domestic and global prices.
Vadim Vorobyev, president of Lukoil, expects this comprehensive measure to stabilize Russia’s domestic fuel market.
Background Russian Diesel
The Russian government had reduced large payments in September, straining its budget due to increasing costs related to the Ukrainian conflict.
To help, Gazprom Neft rescheduled maintenance work and continued fuel supplies to Russian consumers.
This move by Russia comes at a crucial time for both domestic and international stakeholders.
Locally, the Kremlin had been wrestling with inflation and the rising cost of living.
Meanwhile, globally, diesel scarcity had started impacting logistics and transport sectors.
Therefore, this decision strikes a balance between Russia’s economic stability and international market demands.
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