Russia Removes Gasoline Export Ban As Domestic Market Stabilizes
Russia has lifted its gasoline export implemented in mid-September, citing a supply surplus of some 2 million metric tons, Reuters reports. The lifting of the export restrictions follow a similar move to suspend restrictions on diesel exports by pipeline during the first week of October. Reuters cited the Russian energy ministry as saying on Friday that domestic market saturation had been ensured over the past two months, creating a surplus of motor gasoline. The ministry said it could reimpose export bans if that surplus vanished. Russia restricted diesel and gasoline exports on September 21 in an effort to stabilize domestic fuel prices in the face of soaring prices and shortages as crude oil rallied and the Russian ruble weakened. Prior to implementing the bank, Russia had raised mandatory supply volumes for motor gasoline and diesel fuel to deal with a supply crunch. The ban on diesel was lifted on the condition that at least 50% of producer supplies went to the domestic market. Russia’s diesel exports had been redirected from the European Union following the bloc’s embargo in February this year, to markets in Turkey, the Middle East, Africa and South America. In the meantime, Russia will continue its voluntary oil output cuts through the end of this year in coordination with OPEC+; however, the gasoline and diesel bans had made that commitment more challenging. Data from the first week of November showed that Russia’s seaborne diesel exports had fallen by 11% in October, compared to September. According to the Carnegie Endowment for International Peace, Russia’s gasoline and diesel bans were “partly the result of efforts to protect domestic fuel prices from the vagaries of the market, and partly a consequence of government infighting. It’s also a stark demonstration of how the stresses of the war in Ukraine are revealing themselves in unexpected places.” Also on Friday, the Russian State Duma (parliament) formally reinstated damper payments subsidies to oil refineries, Reuters reported, in an effort to further encourage sales on the domestic market over higher-priced exports.
India’s crude oil imports to rise in November, December due to festival season, industrial activity
India’s crude oil imports are expected to grow from October level during the remaining two months of the calendar year in line with the ongoing festival and marriage season, which also witnesses an uptick in industrial, construction and farm activities. Analysts and trade sources said that domestic oil marketing companies (OMCs) have increased refinery runs for the remainder of 2023 to meet the growing demand for auto fuels, bitumen, fuel oil and other refined petroleum products. A top official with a public sector OMC explained, “Traditionally, consumption rises during October-March in line with the festival and marriage season as well as industrial and construction activity. Besides, agricultural activity for Rabi season also picks up. This coupled with some exports will push demand.” Energy intelligence firms Kpler and Vortexa also expect crude imports by the world’s third largest energy consumer to grow in November and December this year. Similarly, OPEC in its latest monthly oil market report for November said, “India’s crude imports fell further to an average of 4.3 million barrels per day (mb/d) in September, the lowest in a year, although are expected to recover with the start of Q4 2023.” Rising imports Kpler’s Lead Analyst (Dirty Products and Refining) Andon Pavlov said considering that maintenance season is now starting to wane and seasonally demand at home starts to pick up, following the monsoon season and as visible in the latest Petroleum Planning and Analysis Cell (PPAC) data, refinery runs are also going to increase gradually over November and December, pushing import requirements higher as well. India imported 4.66 mb/d of crude in October, which is almost flat compared to September, Kpler data show. “In our books, we see (refinery) runs standing at 5.3 Mb/d and 5.45 Mb/d in November and December, respectively, some 500,000 barrels per day (b/d) and 130,000 b/d higher Y-o-Y over said months, (respectively), mainly due to a baseline effect from last year,” he told businessline. However, Pavlov said, considering that discount on Russian imports has diminished somewhat over the past months and in light of seasonal tightening of the Russian crude balance towards the end of year, as refinery runs seasonally increase, it seems like the share of Russian crude is going to remain in check at best. Discount on Russian crude to India continues to be lower at around $4-5 per barrel in May-August 2023 against $6-10 earlier. Vortexa’s chief analyst for Asia Pacific, Serena Huang said, “I expect India’s crude imports to continue rising through to December, with demand supported domestically by the festive season and exports.” India’s oil demand outlook in Q4 2023 should continue to benefit from strong annual GDP growth in 2023, combined with robust manufacturing activity and a proposal by the government to increase capital spending on construction, OPEC said. Besides, the post-monsoon harvesting season and construction activity are also expected to support oil demand growth. In addition, the forward-looking indicators show strong manufacturing and services PMIs, suggesting prospects for healthy oil demand in the near term, it added. “In Q4 2023, oil demand is projected to grow by 243,000 b/d, Y-oY. Distillates are expected to be the driver of oil demand growth, supported by harvesting, construction and manufacturing activity. Additionally, traditional festivities are expected to support mobility and boost gasoline demand, while increasing air travel is expected to support jet/kerosene demand,” OPEC projected. Similarly, S&P Global Commodity Insights said, “Overall, India’s oil demand is expected to grow by 258,000 b/d in 2023, revised higher by 9,000 b/d from last update on strong diesel sales. Middle distillates, gasoil, and kerosene/jet fuel combined will account for more than 50 per cent of the growth, with gasoline and naphtha together to contribute 27 per cent of the growth.” The demand for petrol and diesel rose to a four-month high in October, while jet fuel sales surged to their highest in the current financial year and calendar year as rising industrial and construction activity coupled with the onset of the festival season boosted sales.