Russia surprisingly lifts diesel export ban after Kremlin’s order to halt fuel exports
Oct. 6 (UPI) — On Friday, Russia reversed its decision to ban diesel exports just two weeks after the Kremlin mandated a halt to all fuel exports in an effort to address domestic shortages.
The reversal came with a condition that companies must reserve at least half of their produced diesel for the local market, as stated by the Kremlin.
European diesel prices experienced a decline that morning. The ICE gas oil futures contract in London dropped nearly 3% to $836.75, although it recovered and ultimately decreased by only 0.7% at 11 a.m. GMT.
However, the ban implemented on September 21, which resulted in surging prices on the global market, continues to be in effect for gasoline. Resellers of petroleum products will now face a new “protective duty” of $495.60 per ton to discourage “grey exports” and forward selling.
The government aims to prevent resellers from purchasing fuel in advance for subsequent export or disguising exports as different products.
The export ban was implemented due to scenes of Russians waiting in long lines for gas in the world’s third-largest producer and refiner of oil products.
Moscow hopes that these restrictions will help stabilize the fuel market, leading to reduced prices for consumers and preventing companies from redirecting supplies abroad to take advantage of high international prices, thereby depriving the price-controlled domestic market.
To circumvent sanctions, India and Turkey have been assisting Russia in exporting its oil to global markets. They import increasing volumes of Russian crude oil, refine it into fuel, and legally sell it to Europe and Britain through the international market, despite bans and price caps on Russian oil imports.
In retaliation for its actions against Ukraine, the G7+ group of countries imposed a $60 price cap on sea exports of Russian oil. Countries paying higher prices risk losing access to insurance and financial services crucial for shipping oil internationally.
The supply cut resulted in rising oil prices over the summer, surging above $94 last week before subsequently decreasing. As of 7.40 a.m. EDT, Brent Crude was trading at $84.07, while West Texas Intermediate was at $82.33, both remaining more than 10% higher than in August.
