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The temporary ban on exports of Russian diesel and heavy refinery maintenance reduced Russia’s diesel exports by sea by 11% in October compared to September, according to data from LSEG and trade sources cited by Reuters.
On September 21, Russia surprised the markets by announcing a temporary ban on exports of gasoline and diesel to stabilize domestic fuel prices amid soaring crude prices and a weak Russian ruble. Diesel and gasoline exports were temporarily banned to all countries except for four former Soviet states—Belarus, Armenia, Kazakhstan, and Kyrgyzstan.
Since the EU embargo on imports of Russian fuel came into force in early February, Russia has diverted most of its diesel exports – previously going to the EU – to Turkey, the Middle East, North and West Africa, and Brazil in South America.
The ban affected those exports and analysts did not expect a prolonged ban on diesel shipments, because of Russia’s limited storage capacity which, once full, could force refiners to cut processing rates.
Russia partially lifted the ban on diesel exports on October 6, and seaborne exports resumed shortly after that. The ban was lifted on exports of diesel and gasoil delivered to seaports by pipeline, provided that the diesel producer supplies at least 50% of the diesel to the domestic market.
The easing of the diesel export ban was aimed at preventing storage capacity from overflowing and crude processing rate cuts at domestic refiners. Only seaborne diesel exports are now allowed, and the ban on gasoline exports and on diesel exports by rail remains in place. The goal is to supply more fuel to the domestic market and prevent a spike in wholesale fuel prices.
This week, Russian Deputy Prime Minister Alexander Novak told the media that Russia has no immediate plans to lift the partial ban on fuel exports introduced in September until part of the volumes that Russian refineries churn out “have nowhere to go.”
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.