Gasoline Price Growth In Russia Sets 14-year Record

Prices soared after attacks on refineries.

Drone strikes that have hit three dozen major Russian oil refineries since early August have pushed fuel inflation to values the economy hasn't seen since the early 2010s, The Moscow Times reports.

As reported by Rosstat, average retail gasoline prices in the country increased by 2.58% in September (the maximum since 2018). And in annual terms, the growth of price tags at gas stations reached 12.73% and became a record for the last 14 years.

The price "shock" in the gasoline market exceeded the values of all fuel crises of recent years: 9.84% in September 2023, 12.3% in June 2018. The last time gasoline prices rose faster was in December 2011, according to Rosstat data: by 14.92% year-on-year.

The rising fuel prices pose a threat of accelerating general inflation, warns Vladimir Chernov, an analyst at Freedom Finance Global: "Fuel prices inevitably raise costs in agriculture, transportation and logistics, transforming into higher prices for food and essential goods"

In October, gasoline inflation accelerated again: in the week ending October 6, average prices at gas stations jumped by 0.85%. For comparison: in the first three weeks of September gasoline prices rose by 0.45-0.62% per week, and in the last week - by 0.8%.

Retail prices are growing following wholesale prices, which have jumped by 40-50% since the beginning of the year, and in August and September at least 10 times rewrote historical highs. Due to the strikes on refineries in the country there is a shortage of gasoline - in the amount of 20% of domestic consumption, estimated earlier a source of "Kommersant" familiar with the balance of supply and demand.

In August, the downtime of primary capacity of oil refineries reached 23% and became a record in history, and in September it increased even more, said industry sources Reuters.

The series of Ukrainian attacks affected every third Russian refinery, estimated Bloomberg. In October, the Antipinsky refinery in the Tyumen region, Slavneft-YANOS in Yaroslavl, Rosneft's Tuapse refinery, Orsknefteorgsintez in the Orenburg region, and Kinef in the Leningrad region were hit. The latter was forced to shut down its main primary oil refining unit, which provided it with 40% of its capacity, because of the fire.

In September, at least four oil refineries were completely or partially shut down because of UAVs. Among them were the Novokuibyshevsk refinery, Gazprom's Astrakhan GPP, and Rosneft's Ryazan refinery, which is among the top 5 in the country and supplies fuel to the Moscow region, among others.

In October, refining volumes at Russian refineries fell to 4.86 million barrels per day, down almost 10% from July, and the lowest in at least five years.

Gasoline price growth has remained at elevated levels since mid-June, and this may contribute to accelerating price increases for a wide range of goods in the coming months, warns Natalia Orlova, chief economist at Alfa Bank.

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