President Vladimir Putin has acknowledged that Russia faces persistent fuel supply problems, with queues at gas stations and a potential full ban on diesel exports under consideration. The Kremlin is weighing measures to stabilize the domestic market after Ukrainian drone strikes on refineries reduced production, squeezing a sector that historically exported about 40% of its diesel. Putin warned against hasty action that could create overstocking issues for producers, echoing a failed 2023 diesel ban that lasted only two weeks.
Russia accounted for roughly 11% of global diesel supplies last year, meaning any export ban would tighten already strained global flows amid the Middle East conflict. The Energy Ministry has advised against a ban for now, and the government will reassess the situation on Monday. Existing curbs on gasoline and jet fuel exports are already in place, with gasoline inventories down 4% year-on-year, though Putin insisted shortages are "not critical" and infrastructure is "recovering quite fast."
The core challenge is balancing domestic stability with the risk of disrupting Russia's own oil producers, who cannot easily redirect export volumes to local consumers. Putin stressed that refineries must resume output swiftly, fuel imports must be sufficient, and oil infrastructure must be better protected. The government has already reduced mandatory exchange-traded gasoline sales to ease supply, and a decision on extending zero import duties on gasoline is expected this week.
What to watch next: Whether Russia imposes a full diesel export ban, and how quickly refineries can restore output after drone attacks, as this will determine global diesel supply and domestic price stability.
Key Takeaways
- Putin admitted fuel shortages persist, with queues at gas stations and a potential diesel export ban under review.
- Ukrainian drone strikes on refineries have slashed diesel output, squeezing a market that normally exports 40% of supply.
- A diesel ban would tighten global flows already strained by the Middle East war, but risks overstocking Russian producers.
- Russia has already banned gasoline exports until July and is considering extending zero import duties on gasoline.
Insights & Analysis
- The Kremlin is caught between protecting domestic consumers and maintaining revenue from diesel exports, a tension that could lead to short-lived, disruptive policy swings.
- Russia's reliance on aging refinery infrastructure and inadequate air defenses means drone strikes will continue to threaten fuel supply, forcing reactive rather than strategic policy responses.