The Russian government on Wednesday extended the ban on diesel, marine fuel, and gasoil exports until October 31, 2023. This decision was made to maintain a stable situation in the domestic fuel market and respond to higher fuel demand during the harvest season. This ban, which has been in place since the summer of this year, prevents fuel producers from exporting their products, resulting in a global shortage of Russian diesel.
Consequences of the Diesel Export Ban
The Russian government continuously extends this ban for one month at a time, as Ukraine's attacks on Russian refineries have significantly impacted domestic fuel production. Since the spring of this year, Russia has faced a crisis in gasoline and diesel supply, following intensified Ukrainian airstrikes on refineries. This situation has negatively affected fuel supply on the battlefronts as well as the domestic market in Russia.
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Impact on Global Markets and Prices
The ban on Russian diesel has exacerbated the crisis in the Middle East and tightened global diesel markets. Prior to this ban, Russian diesel exports accounted for about 10 percent of global diesel supply in open waters. The absence of Russian diesel has contributed to slow and unstable fuel shipments from the Strait of Hormuz and has also reduced refinery operations in the Middle East. According to Brian Mandell, Executive Vice President of Marketing and Commercial at Phillips 66, currently 7 million barrels per day from refineries in Asia and the Middle East and 1.4 million barrels from Russian refineries are inactive.
With supply constraints from Russia and the Middle East, retail diesel prices have reached historic highs. In the United States, the average diesel price as of September 30 has reached $6.41 per gallon, indicating significant impacts on transportation costs and energy supply.
