Russia plans to reduce diesel exports from its key western ports to almost nothing next month after the government banned overseas sales to tame surging prices at home.
Loadings from Russian ports on the Black and Baltic Sea are planned at almost 223,000 thousand tons in October, according to industry data seen by Bloomberg.
However, that includes 210,000 tons from Belarus to be loaded in Primorsk and 12,800 tons to be loaded in Novorossiysk for customers in the Eurasian Economic Union. Those flows are exempt from the ban, which was announced on Sept. 21 and was designed to lower domestic fuel prices.
Europe’s diesel prices soared. Futures jumped as high as $1008 a metric ton, a gain of about $16 in a few minutes, as Russia is the world’s biggest seaborne exporter of diesel-type fuels. The fuel’s premium to crude oil also jumped.
There has been skepticism among traders about how aggressively Russia would be able to enforce the ban, with some saying it would cause the nation’s storage tanks to fill quickly and therefore be unsustainable. A full halt through October, were it to materialize, would upend that idea.
Prices have been surged around the world, in part because of curtailments of supplies of diesel-rich crudes from Russia itself. Curbs in output were in a response to western sanctions following the war in Ukraine.
A government decree allowed minor deliveries to trade-alliance partners from some former Soviet republics, humanitarian aid and transit, as well as consignments that already have loading papers and are accepted by oil-pipeline operator Transneft PJSC and Russian Railways JSC.
On Monday, the government has also excluded bunker fuel, gasoils and some middle distillates from the ban.
The plan seen by Bloomberg only shows shipments of diesel delivered to ports by pipeline. Smaller volumes may also be sent by rail. Pipeline operator Transneft, which compiles the loading schedules, didn’t immediately respond to a request for comment.
Russia’s surging car-fuel prices has become one of the biggest contributors to inflation, a potential political headache as the Kremlin prepares for the presidential election in March. Earlier this week, President Vladimir Putin urged his government and Russian oil producers to jointly resolve fuel-supply and oil-tax issues — less then a week after the cabinet unexpectedly imposed the ban on gasoline and diesel exports.
No end date for the ban has set yet. While the measure has already cooled prices on Russia’s main commodities exchange, pump prices continue to rise.
The government is ready to take “strict regulatory measures”, if the situation doesn’t change, Deputy Prime Minister Alexander Novak said late Thursday, following his meeting with officials and oil executives.
Such measures could be comparable to those in force on the fertilizer market, according to Novak. Back in December 2021, in a move to curb rising food prices, Russia introduced fertilizer export quotas and has been extending them ever since.
Novak also instructed Russian customs and tax services to control exports of car fuels, and volumes stored in the port facilities will be redirected to domestic supplies.
Russia’s energy minister warned the export ban wouldn’t be lifted anytime soon.
Follow us on social media: