BAKU, Azerbaijan, September 27. OPEC (13 countries) and OPEC+ cannot bring a solution to the problem related to Russia’s restriction on exports of motor gasoline and diesel fuel, Francis Perrin, Senior Fellow at the French Institute for International and Strategic Affairs (IRIS, Paris) and at the Policy Center for the New South (PCNS, Rabat), told Trend.
“These countries could supply more crude, if they decided to do so (which is not the case now), but there is a bottleneck with the capacity of the refineries throughout the world to produce more gasoil. More crude would not necessarily mean more gasoil. So far so good as the situation is under control but we will have to follow closely what will or could happen this winter,” he said.
Russia has recently enacted temporary export restrictions on motor gasoline and diesel fuel, a move officially authorized by Prime Minister Mikhail Mishustin. This strategic action has been undertaken with the primary goal of stabilizing fuel prices in the domestic market.
The implementation of these temporary constraints is expected to have a two-fold effect. Firstly, it is anticipated to bolster the availability of fuel within the domestic market, ultimately leading to a decrease in fuel prices for consumers.
This decision follows earlier steps taken by the government to address challenges in the fuel market. Notably, the government raised the standards for the supply of motor gasoline and diesel fuel on the stock exchange, aiming to enhance transparency and market stability. Furthermore, a daily monitoring system for fuel purchases in the agricultural sector has been initiated, with rapid adjustments in volumes as needed.
“This measure was announced on 21 September and, since then, world oil markets have been fairly stable. Brent price for November 2023 contracts in London is now at nearly $95 per barrel and West Texas Intermediate (WTI) at more than $91/b. This restriction had an immediate upward impact on gasoil prices but this effect did not last,” said Perrin.
He pointed out that the market is already struggling with the reductions of crude oil production decided by the OPEC+ coalition (23 countries) or by some OPEC+ countries, especially Saudi Arabia and Russia.
“Moscow decided recently to extend its cut of 300,000 b/d of oil exports until the end of 2023. But, so far, prices have stabilized at a high level despite a soaring world oil demand, production cuts by OPEC+ and falling oil stocks. The main reasons for this relative stability are economic concerns about the Chinese economy (China is the second-largest oil consumer and the largest oil importer), risk of a ''shutdown'' at the federal level in the US, rising interest rates and a strong US dollar.
That being said, the impact of these Russian measures on gasoline and gasoil could be before us and not behind us. A lot will depend on the coming winter in the Northern hemisphere: will it be mild in Europe, as last year, or cold? For gasoline Russia's importance on the world market is weak but the situation could be more difficult as far as gasoil is concerned as this country is traditionally a large exporter. Further to the war in Ukraine, the European Union and other Western countries succeeded in getting rid of Russian refined products, including gas oil, thanks to supplies coming from the US, China, India and the Middle East but it would be difficult to find in the coming months new large supplies of gas oil somewhere on this planet,” he added.
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