In a broadcast interview, a Russian economist explained why gasoline, despite Russia’s abundant refining capacity, is not trending cheaper at the pump. The analyst noted that the country hosts numerous refineries that can fully meet domestic demand, yet a mix of factors, including sanctions, complicates the flow of this fuel to international markets.
As a result, the domestic market experiences an excess supply, which would normally push prices downward.
Yet prices do not fall as one might expect because more than just the basic balance of supply and demand shapes the outcome.
“Even with the market cut off from many international players due to sanctions, the oil producers still scout foreign markets. They will effectively ‘tell’ the U.S. Department of Energy and show those price signals,” the economist stated.
The analyst emphasized that gasoline costs are linked to conditions on global markets, but ruble prices for gasoline have not risen recently. He offered a forecast suggesting ruble-denominated gasoline prices could remain subdued for now.
Reports from the Ministry of Finance suggested possible export controls on fuel leaving Russia for the domestic market. Traders have increasingly bought fuel locally with the intent to export it later. While this might be profitable under typical conditions, where domestic consumption and VAT influence pricing, the current sanctions regime has created a fuel surplus and a softening in domestic stock prices. Despite high global oil prices, analysts note that the domestic market response remains muted. (Cited: economist’s interview and government briefings)