Russia resumes seaborne diesel exports only weeks after initial ban on shipments

Fri 6 Oct 2023
Posted by: Phillip Adnett
Trade News

Barrels of oil with Russian flag sprayed on, in front of oil pipeline

Russia has permitted seaborne exports of diesel to resume, weeks after the government imposed restrictions on its energy exports.

In an announcement on its official Telegram, Russia said that it was lifting the ban on diesel exports “provided that the manufacturer supplies at least 50% of the produced diesel fuel to the domestic market.”

Gas exports remain banned.

Energy turmoil

As part of the announcement, Russia’s government also said it had imposed a “protective duty” of 50,000 roubles per tonne for resellers of petroleum and related products in an effort to prevent unauthorised “gray exports”.

Energy is one of Russia’s most traded commodities, and its initial decision to clamp down on international sales caused significant disruption to global energy markets.

Russia exported over 35 million tonnes of oil in 2022, most of which was shipped by pipeline.

On 21 September, Russia imposed an almost-total ban on diesel and petrol exports, raising fears that the government was trying to “weaponise” energy supplies.

Prices of crude oil jumped in response to the initial ban, hitting almost US$94 dollars per barrel.

Oil prices down

Reuters reported that Brent futures fell down by 0.08% to $84.01 per barrel, and were on track for their steepest weekly decline since March.

Brent futures are seen as a benchmark for the global crude market.

ICE Gas Oil contracts, seen as proxy for diesel prices, also declined by 2.2% in the morning of the announcement.

The Kremlin’s decision to ban exports also caused domestic energy prices to rise, stoking further inflation fears ahead of March’s presidential election.

Although Russia is currently categorised as “not free” by Freedom House, and the election results are likely to be heavily manipulated, any sign of weakening in public support for incumbent president Vladmir Putin could cause political problems for the government.