Problems on Russia's aviation fuel market may emerge after the earlier crisis on the petrol market, where strikes on oil refineries have led to shortages and wholesale prices have risen by 40-50% since the start of the year.

Source: The Moscow Times, an independent Amsterdam-based news outlet, citing a statement by Maksim Dyachenko, managing partner and board member of Proleum, Russia's largest private supplier of oil products; RBK, a Russian news web portal, citing its sources

Details: Dyachenko said that the Russian government has relaxed requirements for refineries to deal with the shortage of oil products. In particular, it is now permitted to produce winter-grade diesel fuel by mixing summer diesel with kerosene. This creates a risk of a sharp rise in the price of aviation kerosene which in turn poses risks for the Russian aviation industry.

The Russian government also understands the threat. At a meeting chaired by Russian Deputy Prime Minister Alexander Novak, officials discussed the option of introducing a directive cap on the growth of aviation kerosene prices on the exchange, sources of RBK have reported.

Such caps are currently in place for petrol: applications to buy petrol cannot be submitted at a price higher than 0.01% above current market quotations.

Unlike petrol, wholesale prices for aviation kerosene in Russia are now lower than at the beginning of the year – RUB 79,650 (US$984.55) per tonne against RUB 82,412 (US$1,019). However, since September, aviation fuel has become more expensive, by 11% in 2 months, and now costs about RUB 80,000 (US$988.9) per tonne.

Background:

• The BBC estimates that at least 57 Russian regions – more than half of the country – have experienced fuel supply disruptions following Ukrainian strikes on Russian refineries.
• The Russian government extended the temporary ban on petrol exports and imposed restrictions on other types of fuel until 31 December 2025.
• Ukrainian President Volodymyr Zelenskyy said that the fuel shortage in Russia as a result of long-range strikes has reached 20%.

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