Russia Is Hit By A Fuel Crisis

Gas prices have risen by 20% over the past year.

The fuel crisis in Russia, triggered by Ukrainian drone attacks on oil refineries, continues to rage. Over the past week, from June 23 to 29, gasoline prices rose by another 1.6%, and diesel prices by 2.2%, according to Rosstat. Compared to the previous week (3% and 2.7%, respectively), this represents a slowdown, but over the past month (minus one day), gasoline prices rose by 6.7% and diesel by 6.9%. Since the beginning of the year, their prices have risen by 11.6% and 11%, respectively, according to The Moscow Times .

The monthly increase in gasoline prices was the highest on record since July 2009 and ranked among the sharpest in a quarter-century of available Rosstat statistics. The only months (other than July 2009) when gasoline prices rose faster were June 2009 (by 8.82%), in September 2005 (by 7.86%), and in June and May 2002 (by 12.26% and 10.68%, respectively).

The annual price increase was 19.71%, according to the Ministry of Economic Development, marking the highest rate since May 2010.

Due to fuel shortages, the price spread has widened sharply. Oil companies’ retail chains are keeping prices close to pre-crisis levels, Reuters reports: a liter of AI-92 costs 63–66 rubles, and AI-95 costs 70–73 rubles. However, private gas stations have begun offering fuel for 120 and even 140 rubles per liter.

In annexed Crimea, prices are approaching 200 rubles. The price of gasoline at gas stations in Sevastopol has risen to 199 rubles per liter; in Crimea, fuel is sold for an average of 185–200 rubles, according to Kommersant. There are no oil refineries there, and supplies from Russia have practically stopped due to attacks by Ukrainian drones.

Despite a slowdown last week, the increase in gasoline prices in June “still turned out to be the highest in many years,” notes economist Kirill Rodionov. This will affect inflation trends, especially given the restrictions on fuel distribution, which are driving up freight costs, he warns: “Ultimately, these restrictions will be passed on to the prices of ‘non-fuel’ goods and services.”

Inflation is already accelerating, according to Rosstat data: the average daily price increase in June was six times higher than in May and four times higher than in June of last year. Since the beginning of the month, the consumer price index has risen by 0.85%—a record for June since 2012. Annual inflation, according to the Ministry of Economic Development’s calculations, has increased for the fifth consecutive week and reached 6%—the highest level since January.

First Deputy Prime Minister Alexander Novak attributed the gasoline shortages to “logistical changes.” Drones have partially or completely disabled most major oil refineries in the European part of Russia. The Moscow Refinery, which supplied about 40% of the capital’s consumption, has been shut down until the end of the year. In an attempt to secure gasoline, Russia has turned to imports from neighboring countries and even purchased a small shipment from India.

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