Alexander Novak, the Deputy Prime Minister of Russia, announced on October 2, 2023, that the country may partially resume diesel exports if it returns to a production surplus. He raised this issue during a meeting with the Federation Council and described the market situation as balanced and well-supplied.
Impact of Attacks on Diesel Production
Russia, which is traditionally the second-largest diesel exporter in the world, has reduced diesel production since July due to ongoing Ukrainian drone attacks on its oil refining sector. This production halt will continue until the end of October. For non-producers, including traders and refineries with a production capacity of less than one million tons per year, this ban will remain in place until the end of January 2024.
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Novak added that since Russia produces more diesel than it consumes, it is necessary to avoid excessive stockpiling. This accumulation could lead to reduced refinery capacity and impact the production of other products.
Return to Gasoline Exports
The Deputy Prime Minister stated that when the fuel market stabilizes, Russia will return to domestic gasoline consumption and its export to other countries. Russia produces, on average, 10 to 15 percent more gasoline than its consumption and described gasoline imports as a temporary measure.
The ban on gasoline exports, which was the first type of fuel banned by the Kremlin in April 2023, has now been extended until the end of January 2024. This action has led Russia to turn to foreign suppliers for local fuel imports, raising global concerns about international shortages.
Novak also clarified in his statements on October 2 that Russia will continue its attacks on Ukrainian ships and sensitive targets and did not condition this action on the cessation of Ukrainian attacks on Russian refineries.
Statements by Russian President Vladimir Putin, made on the sidelines of the Valdai meeting in Moscow, indicated that Russia has enough diesel, but due to foreign sanctions, this fuel will not reach international markets, reflecting growing global concerns about rising diesel prices.
According to estimates by S&P Global Energy CERA analysts, by the end of August 2023, nearly half of Russia's main refining capacity had been rendered inactive due to Ukrainian drone attacks. These frequent and targeted attacks typically hit the most uniform locations and have impacted the Russian economy.
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