Russia Eases Diesel Export Ban, But with Conditions

Russia has decided to reverse its seaborne diesel export ban just weeks after imposing it, alleviating concerns in global markets.

The ban, imposed on September 21, had sent shockwaves through the energy sector, causing a surge in European diesel prices and exacerbating existing supply challenges.

The Russian government announced that seaborne diesel shipments can resume as long as the fuel is transported to the nation’s ports through pipelines, primarily serving Russia’s western ports, which account for the majority of diesel exports.

This move provides much-needed relief to importers who were grappling with reduced supplies.

The ban had been enacted due to soaring domestic fuel costs that were driving up inflation and posing a political dilemma for the Kremlin in the run-up to the March presidential elections.

While exports are now allowed to restart, producers are mandated to keep at least 50% of their diesel output within Russia.

Notably, exporters who do not produce their own diesel but purchase it from the domestic market will face a significant export duty, set at 50,000 rubles (almost $500) per ton.

This duty nearly matches the current price of Russian inter-seasonal diesel on the nation’s SPIMEX commodity exchange.

Also, the Russian government is fully reinstating subsidies to refiners to ensure adequate domestic fuel supply and to compensate for the price disparity between domestic and international markets.

This comes after a recent reduction in subsidies was criticized by President Vladimir Putin for exacerbating domestic fuel market issues.