The impact of the gasoline production decrease in Russia on its price

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the magazine "Rambler.Finance" on the causes and dynamics of gasoline price growth in the domestic market:

"Gasoline production has fallen, primarily due to drone attacks on refineries. As a result of these attacks, Russian refineries temporarily lost about eight percent of their primary oil refining capacity, which negatively affects the production of all petroleum products, including gasoline. On the other hand, since March 1, the government has imposed a temporary ban on gasoline exports, and, accordingly, those volumes that were intended for export went to the domestic market. Therefore, it is not surprising that gasoline production is declining, while its supplies to the domestic market remain at the same level."

Wholesale gasoline prices have increased significantly since the beginning of the year against the background of attacks on Russian refineries, as well as in anticipation of a seasonal increase in fuel demand, the expert noted.

"But so far this does not affect retail, since it still has some margin of safety, especially if we are talking about network gas stations owned by large oil companies. At the same time, the situation with the economy of independent refineries is somewhat worse – they always suffer when the dynamics of retail and wholesale prices do not match. Wholesale prices are approaching the peak values of last summer, but another thing is that the situation remains under control, unlike in July-August 2023. The main factor here is that the government is no longer experimenting with damper payments for oil companies. Now the government is trying to act proactively, but at the same time quite carefully," the expert noted.

In this regard, Belogoryev expressed the opinion that the Russian authorities will be able to contain the rise in gasoline prices on the wholesale market and prevent its prices from rising above the inflation rate.

Speaking about retail gasoline prices, the expert expressed the opinion that in the foreseeable future their "smooth growth" will occur.