The price of domestic fuel is increasing, companies want to maximize their profits through exports, Putin said. “It’s all understandable, they do their thing, we do ours,” he said at a government meeting broadcast on Russian state television, according to Bloomberg.
According to Putin, in order to find a solution, the government may also want to examine the practices of other industries, such as fertilizer exports. “If you supply enough to the domestic market, you can also sell abroad, such things exist and work,” he said.
The Russian leader called on the government to respond to the needs of the oil industry.
This is a hen that lays golden eggs
– He told.
Putin also mildly criticized the immediate effects of the temporary fuel export ban that has been in place since September 21. While almost all exports of fuel were stopped, domestic retail prices continued to rise – He told.
Putin’s comments signal that the country’s officials and oil companies have yet to formalize long-term strategic steps to calm Russia’s fuel market, which is experiencing its most challenging period since 2018.
Higher international oil prices and a weaker ruble prompted Russian producers to send more fuel for export, limiting domestic sales. At the same time, in the midst of the war in Ukraine, in order to reduce budget expenditures, the government halved the subsidies paid to refineries to supply domestic customers.
Development of the USD/RUB exchange rate
Unable to curb rising domestic fuel prices ahead of next March’s presidential election, the cabinet took unusually tough measures and banned fuel exports. According to the government decree, the measure is temporary, but the deadline is not indicated in the document.
The cabinet is examining more market-oriented steps to boost the domestic supply, Deputy Prime Minister Aleksandr Novak said during the meeting with Putin.
One possible step would be to more than double the fuel export duty for companies that do not produce the fuel themselves, but export the amount purchased on the domestic market. The government could also consider a complete ban on such flows, known as “grey exports,” Novak said.
We could impose a fairly high duty, we could increase it to 50,000 rubles per ton” from the current 20,000 rubles
– He told.
In the near future, the government will make a decision on further steps that will help stabilize the domestic market, said Novak.
Cover image source: TASZZZ/Reuters via Portfolio