Key facts
- Russia extended its ban on diesel, marine fuel, and gasoil exports until October 31.
- The ban aims to maintain stability in the domestic fuel market and meet harvest season demand.
- Ukrainian attacks on Russian refineries have reduced domestic fuel production.
- Before the ban, Russia supplied about 10% of global seaborne diesel.
- The average retail diesel price in the U.S. was $6.41 per gallon as of September 30.
Russia's government announced on Wednesday that it would extend the ban on exports of diesel, marine fuel, and gasoil for all fuel producers until October 31. This extension effectively keeps Russian diesel shipments out of the global market for another month.
The decision to prolong the ban, which has been in effect since the summer, was made to ensure stability in the domestic fuel market, particularly to meet increased demand during the harvest season. Russia has been facing a gasoline and diesel shortage since the spring, exacerbated by Ukrainian drone attacks targeting its refineries. These attacks aim to disrupt fuel supply for both domestic consumption and the front lines.
The removal of Russian diesel from the global market, which previously constituted about 10% of global seaborne supply, has contributed to tightening middle distillate markets. This situation is compounded by disruptions in the Middle East, including reduced refinery operations following Iranian strikes. Brian Mandell, Executive Vice President of Marketing & Commercial at Phillips 66, noted in early August that approximately 7 million barrels a day of refining capacity was offline in Asia and the Middle East, with an additional 1.4 million barrels per day down in Russia, estimating a long recovery period for these facilities.
The constrained supply from Russia and the Middle East has driven retail diesel prices to record highs, with the average price in the United States reaching $6.41 per gallon as of September 30.