Record-Breaking Surge in Russian Gasoline Prices Amid Ukrainian Strikes and Seasonal Demand

Wholesale gasoline prices in Russia hit unprecedented levels this week, influenced by a series of Ukrainian attacks on Russian refineries that coincided with increased demand during the holiday and harvest periods.

As reported by the St. Petersburg International Mercantile Exchange, the country’s primary commodity market, the cost of AI-95, a popular unleaded fuel widely available at gas stations in Russia, reached a record 82,380 rubles ($1,000) per ton on Wednesday. Although there was a slight decrease of 1.33% on Thursday, prices remained close to their highest point.

This price escalation, which began earlier this summer, has seen wholesale prices surge by over 50% since January. Analysts mainly attribute this rise to an increase in Ukrainian strikes that have damaged refineries, resulting in some major facilities being taken offline and leading to supply constraints.

In response to the situation, the government has implemented a temporary ban on gasoline exports for August and September and is currently contemplating extending this ban through October.

According to the business publication Kommersant, oil companies may have ceased their practice of maintaining lower prices last month, anticipating that the government would retroactively adjust the “fuel damper” subsidy system. This mechanism compensates producers for selling fuel at reduced rates domestically instead of exporting it; however, companies typically risk losing these subsidies if domestic prices rise excessively.

Sources indicated to the publication that officials are considering increasing the allowable difference between domestic and export prices, which would enable companies to continue receiving subsidies despite the price hikes.

On Wednesday, Russia’s Energy Ministry reportedly met to discuss additional stabilization measures. Potential strategies being evaluated include urging oil companies to redirect more diesel from export pipelines to the domestic market and encouraging traders to purchase fuel more consistently to qualify for supplier discounts.

Energy Minister Sergei Tsivilev announced that oil companies have also adjusted their refinery maintenance schedules to avoid clashes with peak demand periods, in an effort to alleviate the ongoing supply shortage.