On Thursday, June 18, the cost of AI-95 gasoline at the St. Petersburg International Commodity and Raw Materials Exchange updated its historical maximum and reached 57.31 thousand rubles per ton. At the same time, the price of AI-92 fuel on the trading platform for the first time since May 2018 rose above 50.72 thousand rubles per ton.

Since the beginning of summer, stock quotes for AI-95 gasoline rose immediately by 10%. Against this background, the Federal Antimonopoly Service (FAS) has already announced measures to prevent an unjustified increase in oil prices. 

“In connection with the media reports about the growth of exchange prices for AI-95, we began appropriate checks and made requests for the exchange,” said State Secretary and Deputy Head of the FAS Russia Andrei Tsarikovsky. 

According to him, if the agency finds a conspiracy, then the perpetrators will be sanctioned by the “antitrust, and possibly criminal law.”

At the same time, at Russian gas stations, the rise in price of fuel was insignificant. According to the Federal State Statistics Service, from June 1 to June 15, the average retail price of a liter of AI-92 in Russia increased by only 0.3% to 42.55 rubles, while the cost of AI-95 added 0.37% and amounted to 46.03 rubles per liter .

“On the stock exchange, gas is mainly bought by small independent companies, and the share of their supplies to the retail market does not exceed 10%. The bulk of the fuel is sold in the gas station’s own networks of large oil companies. Therefore, wholesale exchange prices have a limited effect on retail prices, ”said Mark Goichmann, an analyst at TeleTrade, in an interview with RT.

According to experts, in the spring against the backdrop of the introduction of a self-isolation regime, fuel consumption in Russia decreased, and energy companies reduced the production of petroleum products. After the abolition of quarantine restrictions, the demand for gasoline in the country rose sharply, but oil refineries (refineries) have not yet managed to increase production. As a result, a shortage temporarily formed on the market, and fuel prices began to rise.

“In April and May, part of the refinery went for repairs, but at that time the country still had a self-isolation regime in place, and people with businesses did not need so much gasoline. After the abolition of a number of quarantine restrictions, it became easier to move between regions, which is why the need for fuel increased. However, despite the jump in exchange prices, there is no need to wait for a high growth in the retail price of fuel in Russia, ”said Artyom Deev, head of the AMarkets analytical department, to RT.

On the recommendation of the Ministry of Energy in June, Russian oil companies should increase gasoline production by 30% compared to May (up to 103 thousand tons per day) and redirect fuel supplies to the domestic market. According to the ministry, as a result, the supply of fuel within the country will exceed demand, which will allow “stabilizing the price situation”.

Note that the rise in price of fuel began simultaneously with the restoration of world oil prices after the spring collapse. So, over the past month, the cost of raw materials of the Brent reference brand on the ICE exchange in London has grown from $ 32–33 to $ 40–41 per barrel. However, according to analysts, the final fuel prices in Russia are more dependent not on oil prices, but on the level of tax burden on the business.

“In Russia, oil itself has a share of about 30% in the cost of fuel, while the rest is taxes. So it turns out that the trend in the oil market has almost no effect on Russian prices, ”explained Gennady Nikolaev, an expert at the Academy of Financial and Investment Management, in a conversation with RT.

Protective measures

In the coming months, the increase in gas and diesel prices in Russia will be restrained by a special compensating mechanism - a damper. This was told by RT analyst at Finam Group of Companies Aleksey Kalachev.

Recall that after a sharp rise in fuel prices in 2018, the government agreed with oil companies to freeze wholesale prices. At the same time, it was unprofitable for oil companies to supply fuel to the Russian market at a fixed cost. Export prices significantly exceeded domestic prices, so it was more profitable for business to sell oil products only abroad. As a result, from January 1, 2019, the state began to compensate companies with lost revenues from fuel supplies to the domestic market.

“At low export oil prices, the cost of fuel in the domestic market in rubles allows oil companies to earn superprofits, part of which they share with the budget. If export oil prices are high, the state pays oil companies so that they do not raise fuel prices domestically. Such a mechanism allows avoiding serious jumps in fuel prices in retail, ”explained Kolachev.

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According to experts, a temporary ban on the import of fuel from abroad will also help keep prices near current levels. The corresponding restriction entered into force on June 2 and is valid until October 1, 2020. Thus, the country's leadership is trying to protect the financial situation of Russian manufacturers.

“With a sharp drop in oil prices in the first quarter of 2020, gasoline became cheaper in many countries. In Russia, the damper mechanism keeps the market from fluctuations and does not allow prices to decline. However, selling cheap imported gasoline can be detrimental to Russian refineries. Thus, in order to leave the domestic fuel market behind the “domestic producer”, it was decided to temporarily ban the import of petroleum products, ”said Mark Goikhman.

In general, until the end of summer, the increase in the cost of gasoline in Russia will remain below the inflation rate, analysts say. At the same time, by the end of the year, experts interviewed by RT also do not expect sharp jumps in retail fuel prices.   

“In summer, gas prices may rise by 2-3%. At the same time, we believe that the upward trend in fuel prices further down the year will maintain a restrained format and will not exceed 3-4%, ”concluded BCS Premier economist Anton Pokatovich.