Russian fuel market stable, govt looking at further measures to smooth out exchange volatility
MOSCOW. July 24 (Interfax) - The Russian fuel market is stable and the Energy Ministry is working with the Federal Anti-monopoly Service and oil companies, constantly monitoring and controlling price movement and helping to maintain a balance between supply and demand, the ministry said in a commentary on exchange prices.
"The oil product market is still in surplus, meeting all the economy's needs. The seasonal increase in demand in the summer, typical of market conditions, is reflected in current pricing policy," the ministry said.
To stabilize the situation, oil companies have reduced exports, diverting any surplus fuel to the domestic market. This is increasing supply at exchange trading in July and August. At the same time, pricing transparency is ensured, minimizing the risks of unfounded price increases.
"The Russian government, in cooperation with the Energy Ministry, is working on additional measures to smooth out exchange volatility. Filling station operator margins remain comfortable, a sign of market stability and effective regulation," the ministry said.
Gasoline prices on the commodity exchange have been rising substantially for the second straight week: the price of AI-92 on the exchange are close to the cut-off for zeroing out the fuel damper subsidy, and the price of AI-95 is approaching the high seen in 2023. Going by average exchange prices for AI-92 in July, oil companies have every chance of continuing to receive damper payments from the budget. But if exchange prices for gasoline continue to grow in August and September, then oil companies are more at risk of being left without a damper.
It is possible that a total ban on exports will help ease the tension, and there is talk of one being impose in August for two months. The current ban applies only to non-producers, while oil producers have the right to export gasoline.
Russian authorities have been discussing a ban on gasoline exports for oil companies amid rising prices, Deputy Prime Minister Alexander Novak said on July 11. But fuel market sources said such a ban would only give a respite, since at present gasoline exports are negligible and putting them back on the domestic market will not boost volumes on the exchange.
Fuel market participants do not see any reason for prices on the exchange to fall because the problems that caused the increase in prices in late June and early July have not gone away. The primary cause remains insufficient supply on the exchange. Seasonal demand for fuel will increase until the end of summer, refineries will continue repairs into the autumn, which gasoline supply on the exchange will not increase, and prices could rise higher and higher.
