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Russia imposes 6-month ban on gasoline exports to stabilize prices

Oil prices drop after 4 consecutive gains on supply concerns
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February 28, 2024 (MLN): Russia on Tuesday ordered a six-month ban on gasoline exports from March 1 to keep prices stable amid rising demand from consumers and farmers and to allow for maintenance of refineries in the world's second largest oil exporter, as Reuters reported.

The ban, first reported by Russia's RBC, was confirmed by a spokeswoman for Deputy Prime Minister Alexander Novak, President Vladimir Putin's point man for Russia's vast energy sector.

RBC, citing an unidentified source, said Prime Minister Mikhail Mishustin had approved the ban after Novak proposed it in a letter dated February 21. A second source told Reuters that the decision had been made but the decree had not yet been issued.

"In order to offset excessive demand for petroleum products, it is necessary to take measures to help stabilize prices in the domestic market," Novak was quoted as saying in his proposal by RBC.

Domestic gasoline prices are sensitive for motorists and farmers in the world's biggest wheat exporter ahead of a March 15-17 presidential election, while some Russian refineries have been hit by Ukrainian drone attacks in recent months.

Russia and Ukraine have targeted each other's energy infrastructure in a bid to disrupt supply lines and logistics and demoralize their opponents, as they seek the edge in a nearly two-year-old conflict that shows no sign of ending.

Exports of oil, oil products and gas are by far Russia's biggest export, a major source of foreign currency revenue for Russia's $1.9 trillion economy, and ensure that Moscow has a place at the top table of global energy politics.

The Kremlin has been working with Saudi Arabia, the world's biggest oil exporter, to keep prices high as part of the broader OPEC+ grouping which includes the Organization of the Petroleum Exporting Countries and key allies.

Russia is already voluntarily cutting its oil and fuel exports by 500,000 barrels per day in the first quarter as part of OPEC+ efforts to support prices.

GASOLINE

The top gasoline producers in Russia in 2023 were Gazprom Neft's Omsk refinery, Lukoil's NORSI oil refinery in Nizhny Novgorod and Rosneft's (ROSN.MM), opens new tab Ryazan refinery.

Russia in 2023 produced 43.9 million tons of gasoline and exported about 5.76 million tons, or around 13% of its production.

The biggest importers of Russian gasoline are mainly African countries, including Nigeria, Libya, Tunisia and also United Arab Emirates.

Russia last month reduced gasoline exports to non-Commonwealth of Independent States countries to compensate for unplanned repairs at refineries amid fires and drone attacks on its energy infrastructure.

Outages include the halt of a unit at NORSI, the country's fourth largest refinery, located near the city of Nizhny Novgorod, some 430 km (270 miles) east of Moscow, following what is believed to be a technical incident.

Last year, Russia banned gasoline exports between September and November to tackle high domestic prices and shortages.

This time, the ban will not extend to member states of the Eurasian Economic Union, Mongolia, Uzbekistan and two Russian-backed breakaway regions of Georgia – South Ossetia and Abkhazia.

Wholesale fuel prices in Russia have risen since the start of the year.

The price of 95 gasoline in Russia is about 62 U.S. cents per liter, compared with more than $2.05 in Western Europe.

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Posted on: 2024-02-28T11:11:44+05:00