Russia to ban gasoline exports for six months from March 1

Moscow will introduce a six-month ban on its gasoline exports from March 1, after Prime Minister Mikhail Mishustin approved the measure, Russia's RBC reported, citing a source close to government.

However, the temporary measure, intended to safeguard Russia's domestic supplies ahead of peak demand season, will not be extended to Mongolia, Uzbekistan, Abkhazia and South Ossetia, which are members of the Eurasian Economic Union.

Measures to protect domestic fuel availability follow previous notice from Russia's energy ministry that gasoline exports would be controlled, after unplanned maintenance at a fluid catalytic cracking unit of Lukoil's Norsi refinery dented gasoline supply volumes.

Market sources have estimated that gasoline output from the refinery has halved to 200,000 mt/month since the refinery's FCC suffered an outage Jan. 4, while Russia's Energy Minister Nikolay Shulginov told local media Feb. 20 that repairs could take "a few months."

With monthly exports last reported at around 640,000 mt/month from the start of the year until mid-February, Russia is a small-scale gasoline exporter, however, product flows have been monitored closely by the government to keep domestic prices stable.

Production of Euro 5 gasoline has already dropped by 1.7%-1.8% since the start of the year, Shulginov told Russian media Feb. 20, citing an outage at Volgograd as an additional squeeze on production. Although a crude distillation unit at Volgograd remains offline after becoming the target of a suspected drone attack Feb. 3, production has been ramped up across the plant's two operational crude distillation units, with the sources expecting the damaged unit to be back online imminently.

Furthermore, Russian domestic gasoline demand typically surges in the spring months and then peaks in the summer. Summer demand has been especially active since the Russia's invasion of Ukraine due to sanctions preventing tourism to international destinations.

The gasoline export ban decision follows reports by Russia's Kommersant last week that gasoline exports were down 27% on the year in mid-February, though domestic deliveries were up 5% since the start of the year to 4.44 million mt.

While the energy ministry has previously asserted that production has been sufficient to satisfy domestic demand, the upcoming refinery maintenance season and ongoing outages from Ukrainian drone targets have triggered speculation about reduced supply volumes in the months to come.

In 2023, exports of Euro 5 gasoline products were suspended from late September to Nov. 17 amid concerns around soaring prices at the pump, while restrictions on diesel, the country's larger export market, were put in place over a longer period.

A ban on winter-grade diesel remains effective following measures implemented last year, however, no mention has been made of further controls.

Nonetheless, to avoid shortages of diesel during the upcoming farming season, the government has decided to increase the obligatory diesel sales on the exchange to 16% of output.

Currently, producers are required to sell on the exchange floor 15% of their gasoline and 12.5% of diesel output.

The gasoline export ban follows a price surge in the domestic market since the start of the year. To tackle the price rises, authorities had tightened trading rules on the St. Petersburg exchange, with an aim to limit the use of algorithms. Several companies have been suspended temporarily from trading on the exchange, while further measures, such as curtailing bids if prices rise too quickly, are under consideration.