22 May 2019 13:24

Too early to speak of escalation in Russian fuel market situation, no grounds for this - Kozak

PERM. May 22 (Interfax) - It is too early to talk about an escalating situation in the Russian fuel market, and there are no grounds for this, Deputy Prime Minister Dmitry Kozak said.

As reported, the Russian Fuel Union (RFU) has again sent a letter to the deputy prime minister, who oversees the sector, indicating problems in the petroleum products market and drawing Kozak's attention to the unexpected aggravation of the pricing situation in May 2019.

"Anyone has this right to file a letter. Are there grounds for this? We are monitoring the situation in the market, and exchange prices, as expected, have risen somewhat as a result of increased prices on fuel internationally. But at the moment, these are premature worries," he said.

"The level of exchange prices that we have today provides sufficient marginality for the retail segment. There are no grounds for such fears. I understand them [traders] - they are concerned about maintaining maximum marginality, as was the case for the retail segment in February, in March, when prices for fuel and global prices were rather low," Kozak said, noting that he does not plan to discuss this matter with oil companies thus far.

The RFU has noted that exchange prices, followed by individual wholesale prices, are rising at record rates.

The RFU sees several factors contributing to this growth. They include declining production volumes, prompted by spring maintenance at refineries, a reduction in the volume of shipments to the domestic market amid increased demand after surrogate and counterfeit fuels were pushed out of the market, and increased exports of fuel.

A further reason for price growth, according to the RFU, is "the insufficient effectiveness and forethought put into the damping mechanism, in the formula of which does not account for current wholesale prices, which allows some refineries to take advantage of the mechanism and hold wholesale price above the export parity price."