Russia moves to ban diesel exports as its refineries burn
The war in Ukraine has struck deep into the heart of Russia’s economic engine, as a relentless campaign of drone strikes on the nation’s refineries forces the Kremlin to take defensive measures on the home front.
The Russian government has announced it will ban diesel exports for some companies until the end of the year, a move designed to secure domestic supply as the consequences of the war begin to bite.
This is not a blanket ban, but a surgical strike. The restrictions will only affect resellers—companies that purchase diesel within Russia for the sole purpose of shipping it abroad—Deputy Prime Minister Alexander Novak said on Thursday.
In a further sign of the growing pressure, he also confirmed that the government’s existing gasoline-export ban will be extended for both producers and resellers until the end of the year.
A ‘slight shortage,’ a major headache
The move is a direct response to the damage being inflicted on Russia’s critical energy infrastructure.
In a candid admission, Novak stated that the restrictions are necessary to direct more supply to the domestic market, acknowledging that “currently there is indeed a slight shortage of petroleum products” in some regions.
While he assured that the deficit is being covered by accumulated reserves, the statement itself is a rare acknowledgment of the strain the country is under.
Ukrainian drone attacks have made fuel-producing facilities a primary target, and the impact is clear.
Since the strikes intensified in early August, Russia’s refinery runs have already fallen by at least 7 percent, a significant disruption to its most vital industry.
A limited impact, a larger warning
For the global market, the immediate impact of the diesel ban is expected to be limited.
Russia is one of the world’s most important suppliers of the fuel, which powers everything from trucking and shipping to agriculture. However, the vast majority of its exports come directly from major producers.
Resellers, the sole target of this new ban, account for a mere 1.5 to 2 percent of the nation’s total exports, according to traders’ and analysts’ estimates.
But while the direct effect on global supply may be minimal, the announcement itself is a powerful and ominous signal.
It is the clearest evidence yet that the Ukrainian drone campaign is having its intended effect, creating a domestic headache for the Kremlin that is now forcing its hand on the international stage.
The war, it seems, is no longer just a distant conflict; its consequences are now being felt at the Russian petrol pump.
The post Russia moves to ban diesel exports as its refineries burn appeared first on Invezz
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Russia moves to ban diesel exports as its refineries burn
The war in Ukraine has struck deep into the heart of Russia’s economic engine, as a relentless campaign of drone strikes on the nation’s refineries forces the Kremlin to take defensive measures on the home front.
The Russian government has announced it will ban diesel exports for some companies until the end of the year, a move designed to secure domestic supply as the consequences of the war begin to bite.
This is not a blanket ban, but a surgical strike. The restrictions will only affect resellers—companies that purchase diesel within Russia for the sole purpose of shipping it abroad—Deputy Prime Minister Alexander Novak said on Thursday.
In a further sign of the growing pressure, he also confirmed that the government’s existing gasoline-export ban will be extended for both producers and resellers until the end of the year.
A ‘slight shortage,’ a major headache
The move is a direct response to the damage being inflicted on Russia’s critical energy infrastructure.
In a candid admission, Novak stated that the restrictions are necessary to direct more supply to the domestic market, acknowledging that “currently there is indeed a slight shortage of petroleum products” in some regions.
While he assured that the deficit is being covered by accumulated reserves, the statement itself is a rare acknowledgment of the strain the country is under.
Ukrainian drone attacks have made fuel-producing facilities a primary target, and the impact is clear.
Since the strikes intensified in early August, Russia’s refinery runs have already fallen by at least 7 percent, a significant disruption to its most vital industry.
A limited impact, a larger warning
For the global market, the immediate impact of the diesel ban is expected to be limited.
Russia is one of the world’s most important suppliers of the fuel, which powers everything from trucking and shipping to agriculture. However, the vast majority of its exports come directly from major producers.
Resellers, the sole target of this new ban, account for a mere 1.5 to 2 percent of the nation’s total exports, according to traders’ and analysts’ estimates.
But while the direct effect on global supply may be minimal, the announcement itself is a powerful and ominous signal.
It is the clearest evidence yet that the Ukrainian drone campaign is having its intended effect, creating a domestic headache for the Kremlin that is now forcing its hand on the international stage.
The war, it seems, is no longer just a distant conflict; its consequences are now being felt at the Russian petrol pump.
The post Russia moves to ban diesel exports as its refineries burn appeared first on Invezz
Read More
Commodities wrap: Oil drops on oversupply, copper wary on Grasberg closure