Russia Attempts to Compensate for Increasing Fuel Shortage 0 12

Ukraine has been attacking the oil and gas infrastructure in the Russian Federation for several months, which fuels the Russian military economy. For example, it was recently reported that an oil refinery in Novokuibyshevsk in the Volga region has ceased operations (the enterprise is among the top five producers of gas processing, petrochemical, and organosynthetic products in Russia and Eastern Europe). The fuel shortage caused by Ukrainian strikes on this and other Russian refineries has led to the "energy superpower" being unable to even supply its domestic market.

The official acknowledgment of the fuel crisis in the Russian Federation, which occurred two weeks ago, has firmly established itself in the decisions of the Russian government and in market conditions. Thus, the federal government has canceled the 5% import duty on fuel until July 2026. On the same day, the government of Belarus announced that it had completed negotiations with Russia on the terms of processing Russian oil at Belarusian refineries.

Firstly, the budget of the Russian Federation will have, as Russians commonly say, "negative revenues" (which the rest of the world calls expenses) from the cancellation of duties on imported fuel and from the decline in tax revenues from refineries.

Secondly, the fuel produced in Belarus still needs to be delivered to Russia, which has already raised doubts for the First Deputy Prime Minister of the Russian Government Alexander Novak, who noted that the possibilities for fuel import in the Russian Federation are limited by logistics capabilities.

The Russian market reacted differently to the news of imports. Over the week, gasoline prices rose by 0.12-0.19% on the exchange, leading wholesalers to believe in "healing imports." However, retail prices increased by 0.78% over the week. At the same time, signals of queues and other signs of shortages continued as the population and businesses purchased gasoline and diesel fuel in reserve. In principle, they were doing the right thing, but this further increased the hype.