LondonCNN —
Russia’s government announced Friday that it had largely reversed a ban on diesel exports imposed just two weeks ago in an attempt to stabilize domestic fuel prices.
The Kremlin said in a statement that it had lifted a ban on oil refiners sending diesel via pipelines to ports for shipping to international markets, provided they ensured at least 50% of their output was sold in Russia.
Most of Russia’s diesel exports are transported this way, according to data firm Vortexa, with a smaller portion delivered by rail to ports on the Black Sea.
Russia — the world’s biggest diesel exporter — introduced the restrictions on September 21. They also applied to the country’s gasoline exports, which are much smaller in volume. The Kremlin’s statement Friday made no mention of a resumption of gasoline exports.
Despite the European Union imposing its own ban on Russian seaborne diesel imports earlier this year, news of the curbs last month triggered a jump in wholesale prices for the fuel in the region. That’s because the bloc needs a steady flow of Moscow’s diesel to global markets to keep prices stable.
Wholesale prices in Europe fell as much as 3.6% Friday morning to $837 per metric ton after the Kremlin’s announcement, but recovered those losses later in the day.
Diesel is Europe’s economic workhorse, powering the majority of vans and trucks ferrying goods and raw materials around the continent, as well as a key heating fuel in some countries.
Moscow has accounted for over 13% of global diesel supply so far this year, according to Vortexa. Following the EU ban on imports, Russia redirected Europe-bound diesel to countries such as Turkey and Brazil.
Russia relies on revenues from its energy exports, including vast quantities of crude oil, for a big chunk of its federal budget.
Prices for Brent crude, the global benchmark, rose 34% between late June and late September — mainly on the back of production cuts by Saudi Arabia and Russia — but have since fallen steeply as traders anticipate a drop in global demand.
The price of a barrel of Brent in on course to tumble almost 12% since last Friday. That would be its sharpest weekly decline since March.
Falling oil prices have put downward pressure on the Russian ruble, which fell as much as 2% on Friday to trade above 100 to the US dollar, before reversing most of those losses later in the day. A weaker ruble means Russia will likely pay more for its imports, resulting in higher prices for consumers and businesses.
CNN