Domestic fuel shortages grip Russia, more challenges ahead

Russia, one of the world's largest oil producers, is encounteringfuel shortages, which may be critical for harvesting in some regions of its southern breadbasket. The situation is expected to worsen in the coming months, as per aReuters report.

According to traders, the gasoline market has been impacted by a number of issues, including oil refinery maintenance, train infrastructure delays, and a lower ruble, which encourages fuel exports.

Russia has attempted to address diesel and petrol shortages in recent months, considering export restrictions as a last-ditch effort to avoid a significant fuel crisis, which is sensitive for the Kremlin ahead of a presidential election in March.

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Moreover, the government's plan to reduce refinery subsidies is likely to impair fuel supply in the world's largest grain exporter. Regional oil product depots in Russia's southern regions have been compelled to reduce or even cease gasoline supplies, while retail filling stations have been obliged to limit client fuel sales quantities.

"Ai-92 petrol is not available for retail sales in the Krasnodar region, Adygea, and Astrakhan, and Ai-95 petrol and diesel are scarce," a dealer in Russia's south told Reuters.

Another trader stated that there have been no diesel sales at oil depots and no fuel on retail markets in the whole Samara area, which is located in the Volga River region, for the second week in a row.

On Wednesday, Russian Deputy Prime Minister Alexander Novak stated that there are no gasoline shortages. However, he also stated that the government was working on steps to assure a consistent supply on the domestic market, such as raising mandated sales on exchanges and restricting the number of exporters.

Russian oil supply crunch

The energy ministry announced last week that Russia's oil product output completely matched current fuel demand, despite the diversion of certain petrol and diesel exports to the domestic market and the use of reserves.

Earlier this month, the energy ministry asked oil firms find strategies to limit wholesale gasoline price increases in rural regions.

According to a statement, certain supply challenges have emerged as a result of excessive congestion on trains in southern Russia during the vacation season. Russian Railways said that it is in talks with oil producers to resolve the difficulties. It also told Reuters that fuel supply to southern regions through trains is not dependent on increased passenger traffic.

According to industry insiders, the situation will improve no sooner than October, when several oil refineries will complete their maintenance, while seasonal demand will fall.

(Inputs form Reuters)