Will the price rise? Will it get cheaper? What actually happens to petrol prices?

Fuel – more

Strangely enough, we have nothing to fear. Restrictions on the export of oil and gas from Russia will have a positive effect on the domestic market.

Sanctions against Russia as a state naturally reduce the amount of fuel, oil and petroleum products that can be supplied to the foreign market. And this leads to a shift of export volumes to the domestic market.

Even now, the domestic Russian fuel market is much more saturated than before. The larger quantities of fuel currently supplied to the domestic market create a fairly serious surplus – when supply exceeds demand.

Prices – down

In some regions, sales prices for petrol and diesel declined slowly.

That is, due to restrictions on the export of energy resources from the country, we, motorists, will benefit, as an oversupply of fuel in the market will certainly lead to a further fall in prices.

Of course, this decline will be smooth and insignificant under the circumstances – we can assume a 10% decline from early March prices.

For how long?

The surplus of fuel in the domestic market will persist until exports fully resume, and this will happen after the reconfiguration of the financial system affected by sanctions, or when new markets emerge. I.e Falling auto fuel prices aren’t forever.

Something similar happened in March-April 2020, when a lockdown was announced in our country and traffic on the roads fell sharply – everyone was at home. Then the issue of storage of oil and oil products arose, because due to technical characteristics it was impossible to greatly restrict production and processing. The fuel prices also fell and on international exchanges the oil price even dropped below zero.

But now the situation is different, the economy has just started to recover from the covid restrictions and the demand for fuel is growing. Even if export deliveries to western countries are indefinitely blocked, some of the slumped demand will be claimed by Russian motorists.

In addition, the eastern export route operates continuously, accounting for about 30% of all Russian exports of oil and oil products. Asian countries are ready to absorb the fall in demand – the problem is only in logistics, but it can be solved in the medium term.

To bring down oil prices, which are rising at unprecedented rates, some countries will sell oil from strategic reserves – this will help stabilize prices for some time. But these are one-time deals. All reserves are finite: sooner or later you will have to replenish supplies, and at higher world prices.

Oilers and networkers won’t disappoint you?

I am pleased that the Russian oil refining has approached the crisis in good shape. In Russia, 27 large refineries have been modernized, so now there is no need to purchase complex technological lines – in this sense we have nothing to fear.

Separately, it is worth mentioning the retail fuel market, that is, the networks of gas stations where every motorist refuels. There may be nuances to this, as some of the equipment and software may be unavailable due to sanctions, which can lead to malfunctions in the operation of specific filling complexes. But even if these problems do arise, they will be local in nature – the owners of gas stations will undoubtedly solve them quickly.

Most importantly, Russia has a full motor fuel production cycle, from oil production to consumer retailing, so we are not threatened with energy starvation in the near future.

  • Prices for spare parts in 2022: the real situation and forecast here.
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  • “Behind the wheel” can also be read on VKontakte.

Source: Z R

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