Russia allowed a return to seaborne exports of diesel just weeks after imposing a ban that roiled global markets, taking other steps instead to keep sufficient fuel supplies at home.
Shipments can resume provided that the fuel is delivered to the nation’s ports by pipeline, according to a statement on the government’s Telegram account. Such flows to Russia’s western ports account for the bulk of exported volumes.
The move will be a relief to importers after Russia, the single largest seaborne exporter of diesel-type fuels, slapped a near-total ban on deliveries Sept. 21. The restrictions drove up European prices in an already tight market. Refiners around the world are struggling to produce enough after Russia and Saudi Arabia cut supply of crudes rich in diesel, causing inventories to dwindle.
Moscow imposed the ban after surging domestic fuel costs drove up inflation, creating a potential political problem for the Kremlin ahead of March presidential elections. While exports can now restart, producers must ensure at least 50% of their diesel output remains at home, the government said.
Margins for making the fuel plunged Friday before recovering. The profit from turning crude into diesel slumped as low as $23.89 a barrel, a decline of $2.28 from Thursday, before trading at $24.42. Traders had been skeptical about how long Russia could keep the measure without domestic storage sites overfilling.
Exporters that don’t produce their own diesel but ship volumes purchased on the domestic market will now have to pay a prohibitively high export duty, according to the statement. That’s set at 50,000 rubles (almost $500) a ton, close to the current price of Russian inter-seasonal diesel on the nation’s SPIMEX commodity exchange.
The government is also restoring in full its subsidies to refiners to ensure domestic fuel demand is met and refineries get compensation for the difference between prices at home and abroad.
It had halved the multibillion-ruble payouts last month to rein in budgetary spending burdened by the rising cost of the war in Ukraine. But the move was criticized by President Vladimir Putin, who said the cut aggravated the situation on the domestic fuel market.