Saturday, June 15, 2024

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European

The Russian government has announced that it will end its ban on fuel exports in response to concerns over supply shortages.


Russian diesel exports by sea will restart shortly after an all-out ban was implemented by Moscow, causing a surge in global energy prices.

The Russian government announced on Friday that it has removed limitations on the export of diesel fuel transported to ports through pipelines.

On September 21, a new measure was implemented due to shortages in the local market, which led to long lines at gas stations for Russian citizens, despite the country’s large refining sector.

The government stated that implementing temporary limits will aid in filling the fuel market, ultimately leading to lower costs for consumers. However, due to laws capping consumer prices, some businesses have been taking advantage by selling fuel overseas for higher profits, resulting in limited supplies domestically.

To prevent gray exports, Russia plans to implement a windfall tax of 50,000 rubles (equivalent to $495) per metric ton on the resale of petroleum products. This is aimed at preventing resellers from stockpiling fuel for future export after current restrictions are lifted. Moscow’s statement declares that the government is taking action to stop these attempts by resellers.

In recent weeks, the price of oil has risen to nearly $100 per barrel due to a decrease in supply. This is partly due to countries such as India and Turkey increasing their imports of Russian crude and exports of refined fuel to bypass an EU restriction on importing Moscow’s fuel.

However, despite a significant decrease in revenue from Russia’s important oil and gas sector due to sanctions from Western countries and a limit on fuel prices set by the G7+, there has been an increase in cash flow in the past few months. In September alone, there was a rise of approximately 15 percent.

Moscow has been racing to plug the holes in its balance sheet and direct as much funding as possible toward its stalled war in Ukraine. Spending plans show the Kremlin intends to ramp up defense expenditure to a third of the country’s total budget for 2024, with state borrowing increasing to pay for weaponry and soldiers’ salaries.