Russia Faces Gasoline Shortages Again

The country is on the verge of a full-blown fuel crisis.

As one of the world's largest energy powers and the third largest producer of crude oil on the planet, Russia is on the verge of a full-blown fuel crisis for the third time in the last 7 years.

In August and September, the country may again experience disruptions in gasoline supplies, fuel market participants told Reuters. The ban on fuel exports, which the authorities introduced last week, will not solve the problem, they stressed: negligible volumes are sold abroad compared to domestic consumption - about 2.5 million tons in the first half of this year.

"It will be very difficult in August-September. There may be a localized deficit somewhere. We will see something similar to the crises of 2023 and 2021," one of the sources told Reuters.

Another said that as in early 2024, when major refineries stood up from Ukrainian drone attacks, the Russian government may turn to Belarus for help. "The market will now require completely manual control. Will try to postpone (refinery) repairs where possible. Output (of motor gasoline) will be asked to increase. (Imports) Belarusians will be called in," the Reuters interlocutor said.

According to the agency's sources, the main reason for the gasoline shortage is that private gas station chains this year have not created sufficient stocks for the period of high demand, as they did before.

"Now production is at about the usual level for summer. Sales are also within expectations - growth of about 3%, somewhere - up to 5%. Mostly private individuals are without stocks and buy according to current needs, hence the increased demand," explains a source in a major oil company.

Private individuals in winter and spring, during the period of low prices, did not buy gasoline in advance because of the sharply increased cost of loans this year. "Since March, gasoline (in four months) has gone up about 30 percent. A loan would have "eaten" 8-10 percent in that time. Now it looks good, but at the beginning of spring (when the size of the rise in price was unknown) it looked very risky," said one of the traders.

Another reason for the increase in demand for gasoline, according to retail market participants, could be the frequent delays of flights at airports.

"Those who have the opportunity, choose cars to go on vacation this summer, so as not to spend it in airports waiting for a delayed flight. Additionally, the weather is good - weekend trips have become even more numerous," said the owner of a network of gas stations in the Central Federal District.

Supplying the domestic market with gasoline is complicated by a large number of planned refinery repairs. "This year is denser in terms of repairs compared to the previous year. Lately, the schedule of shutdowns has been heavily condensed - about once every two years. Some refineries stop every year completely. Others, who have modern plants, have 2-3-4 years between repairs, so there are such spikes, unevenness of downtime from year to year," explained the industry source - explained a source in the industry.

Another expert believes that the schedule of unit repairs at refineries has already been shifted. "Regulators were correcting the spring situation with gasoline prices and had already asked to move up the repairs. It turned out that now everyone is piling into the fall. Large-scale repairs are coming, so it will be quite tense with gasoline," he said.

Also because of the upcoming repairs, oil companies are forced to limit the supply of gasoline, as they need to accumulate volumes for their own distribution networks for the upcoming period of downtime. "The vertically integrated oil companies are now stocking up themselves. Gasoline carriers (small wholesale) have severely restricted the supply. What remains is wholesale (by railroad tank cars) - this is the stock exchange. That is why more people go to the exchange, due to which prices there are rising," said a market participant.

It is not known exactly how much fuel is produced in Russia. Authorities classified official statistics on gasoline and then diesel production back in 2024, after UAV raids on oil refineries. According to Reuters estimates, last year the volume of oil refining in the country fell back to 12-year lows - 269.9 million tons.

The problems with the repair of refineries are caused by sanctions, said in July, speaking in the Federation Council, the head of the Ministry of Energy, Sergei Tsivilev. According to him, the "failures" occurring at the refineries are due to problems in the supply of equipment. It fell under European sanctions as part of the first package for the invasion of Ukraine - in February 2022.

"Why are there sometimes failures? Because now in the sanctions regime in which we are: here it is planned, say, for repair of conditionally 4 months, and we have something delayed, something undelivered," - complained Tsivilev.

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