28 Dec 2023 13:37

SPIMEX to keep measures introduced at height of fuel price crisis

MOSCOW. Dec 28 (Interfax) - The St. Petersburg International Mercantile Exchange (SPIMEX) will keep in effect measures in its oil products section that it adopted at the height of the fuel price crisis earlier this year, SPIMEX senior vice president Anton Karpov said in an interview with Interfax.

He said the exchange's function is to organize trading, show the market price and ensure that the maximum number of consumers have access to the resource. However, the SPIMEX accounts for more than 25% of Russia's oil products market and is the main infrastructure organization, Karpov said.

"As they say, noblesse oblige. The exchange can and should take measures to ease market fluctuations. However, the experience of previous crises showed that the exchange can in no way break economic trends, they will translate into the price of the commodity in any case. This will happen until the basic contradiction - the imbalance of demand and supply - is resolved," Karpov said.

He recalled that in the situation that occurred on the market in 2023 the SPIMEX used several instruments that were supposed to dampen excessive price volatility.

"Firstly, we introduced a completely new trading instrument - an opening auction. Of course, in the course of fine-tuning the innovations, some shortcomings were identified, where, for example, one organization could take the whole amount offered for sale. We fine-tuned the mechanism, introducing restrictions in submission of bids at the opening auction - one bid no more than eight lots by railway and one bid no more than five lots by pipeline. The opening auction unequivocally had a positive effect, it made it possible to make the commodity available to a large number of participants at once," Karpov said.

The exchange's second step was to allow sellers to reject bids to buy a commodity shipped to border or port stations if there is a suspicion that it might be exported and not remain in the country.

"This was not without incidents, as, for example, in Primorye and Kaliningrad almost all stations are near ports. However, thanks to cooperation with the Federal Antimonopoly Service, Energy Ministry, regional authorities and market participants, foremost buyers, the SPIMEX and sellers started receiving confirmation letters about the region using the commodity. Thus the mechanism started working. This measure helped to stop 'grey' exports of exchange-traded oil products purchased on the domestic market, on which the damper [subsidy] was paid from the budget," Karpov said.

These measures will remain in effect on the SPIMEX in 2024, he added.