Russian oil companies to ask President Putin for export ban to be lifted : report

Russian oil companies are planning to ask President Vladimir Putin for the export ban on diesel and gasoline to be lifted as it could lead to problems on the domestic market, the daily Kommersant reported.

Oil companies are concerned that refineries, which cannot ship their summer diesel, may not have sufficient storage for winter diesel whose production is due to start shortly. Shortages of winter grade in the past have boosted prices to unusually high levels.

The ban was already filling up refinery storage, according to market sources, who did not expect it to last more than another week as otherwise plants, that are coming back from their autumn maintenance later this month, will have to cut runs which could lead to lower output and domestic supply.

In the spring of 2022, lack of ullage forced a number of refineries to halt operations as they could not ship product in the wake of the invasion of Ukraine.

"The export ban is unlikely to last beyond a few weeks given Russia's limited domestic storage capacity. If the embargo continues beyond this, Russian refiners may be forced to cut runs," S&P Global Commodity Insights oil analyst Rebeka Foley said.

Russian officials have been keen to stress the ban was "indefinite" and would last until the domestic market is fully covered.

In his most recent comments on Oct. 3, Deputy Prime Minister Alexander Novak was quoted by local media as saying the ban would remain until the domestic market was fully stabilized.

Officials have also made it clear that the ban would last until retail and tank farm prices factor in the drop on the spot market. According to local media reports and market sources, that was expected in the next 2-3 weeks.

While spot gasoline and diesel prices on the St. Petersburg exchange started falling as soon as the export ban was announced, there has been a lag at regional tank farms and retail stations which are still selling product purchased at the higher levels, while waiting for newly acquired volumes to arrive.

Meanwhile, delivery times have lengthened this year due to railway delays.

Novak was quoted by local media Oct. 3 saying that tank farm prices in most regions have already fallen by Rb3,000-10,000/mt ($31-103/mt).

Meanwhile, the Federal Antimonopoly Service has launched a series of probes into profiteering and the St. Petersburg exchange has fined participants for breaking its rules as part of the measures to bring stability to the market.