Russia’s ongoing fuel crunch may get worse in the coming months
- September 1, 2023
- Posted by: Quatro Strategies
- Categories: Europe, Oil & Gas
Russia, one of the world’s biggest oil producers, is facing fuel shortages in some parts of its southern breadbasket, affecting the crucial harvest gathering. Market sources attribute these shortages to a combination of factors, including maintenance at oil refineries, infrastructure bottlenecks on railways, and a weaker ruble that encourages fuel exports.
The government’s decision to cut subsidies for refineries is expected to worsen the fuel availability situation in the world’s largest grain exporter. Regional oil product depots in Russia’s southern regions have been forced to cut or suspend fuel sales, and retail filling stations have had to limit fuel sale volumes to customers.
Farmers have also expressed concerns about fuel scarcity, with some reporting that oil product prices have risen by 10% to 20%. The situation is expected to improve no earlier than October, as many oil refineries will complete their maintenance, and seasonal demand is expected to decline.
The Russian government has been contemplating export curbs to prevent a serious fuel crisis, which is a sensitive issue ahead of a presidential election in March. Deputy Prime Minister Alexander Novak has denied fuel shortages but acknowledged that measures are being considered to ensure a stable supply on the domestic market, including increasing mandatory sales on exchanges and limiting the number of exporters.
Wholesale diesel prices in Russia began rising sharply in July, with commodity exchange diesel prices increasing by more than a quarter in the past two months. The situation is also exacerbated by the state’s practice of capping retail fuel prices and only allowing price increases in line with official inflation.
Interested in learning more?
Sign up for Top Insights Today
Top Insights Today delivers the latest insights straight to your inbox.
You will get daily industry insights on
Oil & Gas, Rare Earths & Commodities, Mining & Metals, EVs & Battery Technology, ESG & Renewable Energy, AI & Semiconductors, Aerospace & Defense, Sanctions & Regulation, Business & Politics.
Read more insights
G7 strikes deal to soften global tax rules, shelving Trump’s Section 899 threat
The United States and its fellow Group of Seven (G7) nations have struck an understanding that will effectively shield U.S. firms from certain provisions of a global tax deal, according to a joint statement issued on Saturday by Canada, which currently holds the rotating G7 presidency.
Under this new arrangement, described by the bloc as a “side-by-side” system, Washington agreed to drop Section 899—a controversial retaliatory tax proposal embedded in President Donald Trump’s sprawling tax and spending package. In return, the G7 has crafted a mechanism that recognizes existing American minimum tax regulations and seeks to reinforce the stability of the international tax framework.
EU eyes critical minerals stockpile to shield economy from geopolitical shocks
In a sign of growing alarm over a more volatile world, the European Union is moving toward building up strategic reserves of critical minerals, seeking to buffer its industrial backbone against disruptions triggered by geopolitical rivalries, cyberattacks and environmental upheavals.
According to a draft European Commission document slated for release next week, Brussels is preparing to lay out a roadmap for stockpiling key raw materials vital to Europe’s high-tech and clean energy ambitions. The move underscores how the EU is recalibrating its economic security strategy in response to what it sees as an increasingly perilous global landscape.
EU’s €150 billion SAFE fund aims to build continent’s arsenal
In a bold move to reinforce Europe’s military capabilities and reduce strategic dependence on the United States, European Union ambassadors approved the creation of a new €150 billion defense loan facility on Wednesday. The initiative, dubbed Security Action for Europe (SAFE), is being fast-tracked amid rising anxiety over Russia’s military posture and growing doubts about Washington’s long-term security commitment under President Donald Trump.
Proposed by the European Commission in March, SAFE marks the bloc’s most ambitious defense industrial initiative to date. It comes as European leaders face an increasingly hostile Russia, whose full-scale invasion of Ukraine in 2022 shattered assumptions about European security. Equally unsettling is Trump’s America First doctrine, which many EU capitals fear could lead to a partial or total U.S. military disengagement from Europe in a future crisis.