Russia Faces Potential Gasoline Shortage in August: Export Ban Alone Won't Fill the "Demand Gap"

1. Prologue: The Shock of the "Export Ban" Report

In the Russian economy, fuel prices are a "socially sensitive price" directly linked to the inflation rate. The government announced a temporary ban on gasoline exports until the end of August, but market participants unanimously say that the embargo alone cannot meet demand.Reuters Japan

2. Background of the Embargo: A Stopgap Policy?

Embargoes have been repeatedly implemented during the sowing season, when agricultural fuel demand rises, and the summer vacation season. This time, it was set for about one month from July 28 to August 31, but the actual export volume is only a few percent of domestic demand, and the additional supply from the embargo is limited.ReutersReuters Japan

3. Structural Supply and Demand Gap

Russia's annual gasoline demand is approximately 40 million tons. Although the nominal production capacity of domestic refineries is sufficient, the chronic shutdown of aging facilities and unplanned stoppages mean that supply capacity is thin. Furthermore, retail chains cannot stockpile in advance due to the high-interest rate environment, losing the market cushion.Reuters

4. Summer Factors Driving Demand

In Russia, summer sees an increase in private car travel, and this year, frequent flight delays and cancellations have led to a behavioral shift of "if you can't fly, then drive." Travel demand is estimated to push gasoline sales up by 5-7% compared to the average year.Reuters

5. Refinery Maintenance and Transportation Infrastructure Constraints

From July to September, many refineries conduct large-scale maintenance. The government is requesting postponement of repairs, but long-term delays are difficult due to the increased safety risks from corroded catalysts and piping. Additionally, a shortage of railway tank cars is a bottleneck in transportation capacity, hindering smooth delivery from production sites to consumption areas.

6. The Pressure of a 20% Interest Rate: "Advance Purchase" of Inventory Impossible

The Russian central bank has maintained a policy interest rate of 20% to curb inflation. In this ultra-high interest rate environment, the cost for retail chains to purchase fuel with bank loans and stockpile has skyrocketed, reducing the inventory days from the average of about 12 days to 7 days.Reuters

7. Impact on National Life and Logistics

In the suburbs, there are already traffic jams waiting for refueling, and the price per liter has risen by 10-15% depending on the region. The increase in fuel costs for delivery trucks affects the prices of essentials like food and building materials, hitting low-income groups the hardest.

8. Additional Government Measures: Price Caps and Transportation Subsidies

If the supply-demand tightness becomes apparent, the government is considering ① lowering the price cap, ② prioritizing supply from state-owned enterprises, and ③ expanding railway transportation subsidies. However, price control carries the risk of inducing a black market.

9. Ripple Effects on Neighboring Countries and International Markets

In Kazakhstan and Kyrgyzstan, which have been re-exporting Russian gasoline, there is concern about shortages due to Russia's domestic demand priority. European gasoline futures also rose by 3.2% in the first week of August, with the market beginning to price in supply risks.Reuters

10. Case Study from the Past: Comparison with the 2024 Autumn Embargo

The government also implemented an embargo in September of the previous year, but due to the difference in inventory levels and export volumes, the domestic price suppression effect was limited. Many point out that a similar result is likely this time as well.

11. Expert Opinions

Analysts at the Moscow Stock Exchange predict that "the supply shortage will continue until September, but as demand stabilizes and refineries recover in October, prices will fall back to some extent."Reuters

12. Conclusion and Outlook

In the short term, the gap between the political will indicated by the "export ban" and the market's supply-demand reality has been exposed. For the Russian economy, fuel prices are a crucial variable influencing prices and government approval ratings, and further government intervention is likely. However, unless the chronic issues of delayed equipment updates and high-cost procurement are resolved, the embargo will likely be repeated as an "annual event" every summer.

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