"Solving the problem with diesel, we are aggravating the problem with gasoline"

Marcel Salikhov, president of the Institute for Energy and Finance, gave an interview to Business Online about the current situation on the oil products market.

— Why did the demand for diesel suddenly grow within the country?

— We still continue to export. If we take three main types of petroleum products — diesel, gasoline, fuel oil, they all differ in the share of exports. Almost all gasoline is consumed inside, only 10-15 percent is exported. Half of the diesel is exported, half is consumed. Almost all fuel oil is exported.

The main fuel is gasoline and diesel. Diesel consumption is growing along with the growth of the economy, plus everything related to the special military operation, also on diesel. Therefore, there is a direct dependence on why they began to consume more diesel. Maybe consumption has increased by 15-20 percent compared to 2021, but there is still a large surplus for diesel, it should be enough.

If it is now more profitable to export diesel than to supply it to the domestic market, then, of course, companies will strive to do so. It's inevitable.

— It turns out that the government itself provoked the crisis by reducing the damper?

I have already said that the reduction in payments for the damper will still be translated into retail prices. It was immediately clear that prices would rise.

— The government has imposed a ban on the export of gasoline and diesel. Will this help to stabilize prices within the country and solve the problem with the deficit?

— In my opinion, there is no problem in the price increase itself. It lies in the fact that there is a physical shortage and there is no fuel at the gas stations. This shouldn't happen. And the fact that prices will rise by 10-15 percent, from the point of view of promises, is bad, but in itself it is normal when prices for other goods also rise.

The export ban is a super tough measure. But this is a double-edged sword. On the one hand, if a full ban on exports is introduced, then prices in the wholesale segment will decrease, on the stock exchange they have already decreased by 20 percent. I am not sure that retail will be the same, the maximum will decrease by 5 percent. And it seems to be good.

On the other hand, it should be understood that if diesel fuel is not exported, then oil companies do not receive additional profits, the government does not receive additional taxes from this. The fact that prices on the foreign market are higher leads to the fact that the profits of both oil companies and the government, which collects taxes, are higher.

The technological processes at the refinery are connected. Relatively speaking, in order to produce gasoline, diesel is produced at the same time. But as much diesel as is produced in the domestic market is still not needed. Then companies will begin to reduce diesel production. It is impossible to reduce the output of one product without affecting others. Accordingly, companies will produce less diesel and gasoline. Then the situation worsens, because gasoline is mainly consumed on the domestic market and little exported. For him, the ban does not matter much. But by solving the problem with diesel, we aggravate the problem with gasoline.

— Your forecast: how will the situation develop further, what will happen to prices?

— I think in a month and a half the ban will be lifted, an export duty will be introduced, which they have been fighting for a long time. Perhaps they will increase the payments on the damper, but not to the levels that were. And prices on the domestic market may decrease by a few percent, but there will be no drop by 10-20 percent for retail consumers.

— Your global forecast on oil prices and the global fuel crisis.

— I don't think there will be a global crisis when there is not enough oil. Now it is enough. But the largest oil producers represented by OPEC+, Saudi Arabia, and Russia are trying to increase prices. The policy was successful. But this will lead to the fact that other producers will also begin to increase their production and exports, because it becomes profitable.

Most likely, next year oil prices will remain high in the range of 90-100 dollars per barrel of Brent. There is no reason for prices to go down. The only reason that prices can collapse is if there is a recession, a downturn in the global economy and a crisis. Then oil prices will fall. If not, they will remain at a high level. But, according to market logic, they motivate producers to produce and sell more too. All this will be gradually balanced.