Fuel Market Awaits a Breather

The situation in Russia's fuel market remains tense, but experts expect a gradual normalization over the next two weeks — two months. A rapid resolution of the shortage is hampered by a combination of seasonal demand growth and reduced petroleum product output. Russian refineries are currently producing roughly a quarter less fuel than under normal operating conditions, whereas sustainable supply to the domestic market would require refining capacity to return to at least 90% of typical levels.

The vacation season remains an additional factor: gasoline demand rises due to road trips, so even temporary production cuts are quickly reflected in the wholesale market and at filling stations. For now, authorities are compensating for the fuel shortage through administrative restrictions and increased imports. However, these measures can only buy time, not fully substitute for the restoration of Russian refining capacity.

Refining hasn't kept pace with demand

In July, Russian refineries processed around 4,2 million barrels of oil per day versus 4.1 million bpd the month before. But in August, the figure may decline again: Kpler forecasts refining at around 4 million bpd—nearly 5% below July's level of 4.2 million bpd. For comparison, the normal refining level for the Russian market is estimated at 5.3–5.5 million bpd. Even if production can be raised to 4–4.3 million bpd in September, the gap from normal levels would amount to roughly 1–1.5 million bpd, or 20–27%.

At the same time, total refining volumes don't fully reflect the gasoline market situation. In early July, gasoline output stood at around 70% of seasonal consumption. That's precisely why the main pressure is on gasoline, especially high-octane grades.

The diesel fuel situation is considerably calmer. In July, its output, according to Kpler data, moved into surplus and increased by nearly 10%. That's why the current problem isn't so much about a shortage of all petroleum products, but rather an imbalance between production and demand specifically for gasoline.

Imports plug the most critical gaps

Belarus has become one of the main sources of additional fuel. In July, rail shipments of gasoline from there reached a record 212 thousand tons, up 13% for the month. At the same time, diesel deliveries doubled to 162 thousand tons.

The growth is especially notable in year-over-year terms. For January through July, imports of Belarusian gasoline increased roughly 25-fold to nearly 665 thousand tons, while diesel fuel imports rose almost sevenfold to 418 thousand tons. Belarus is no longer simply supplementing the Russian market—it's becoming a major source for quickly replenishing supply during periods of seasonal shortage.

India has also joined in on the imports. On August 5, Russia received its first confirmed seaborne shipment of gasoline totaling about 42 thousand tons, produced at the Nayara Energy refinery, where Rosneft holds a 49% stake. The delivery demonstrated that the Russian market can tap even more distant routes to compensate for fuel shortages.

Still, relying solely on imports as a long-term solution is difficult. A single Indian shipment of 42,000 tons is roughly five times smaller than the volume of gasoline Russia received from Belarus in July alone. Even combined, such deliveries remain modest relative to the refining deficit: the gap from normal levels stands at around 1–1.5 million barrels per day. So while imports can plug individual shortfalls, they cannot substitute for restoring output at Russian refineries.

Authorities expand room for maneuver

In parallel, the government is easing market operating conditions. The fuel export ban has been extended through January 31, 2027. However, the regime does not apply uniformly to all petroleum products: starting in September, restrictions will no longer cover diesel, marine fuel, and gas oils. Therefore, extending the ban does not in itself mean a complete halt to exports of all fuel types through the end of January.

Another temporary measure concerns petroleum product quality. Until July 1, 2027, the production, import, and circulation of K2, K3, and K4 class automotive gasoline and diesel fuel—corresponding to Euro-2, Euro-3, and Euro-4 standards—are permitted. Authorities view this as an anti-crisis mechanism allowing them to expand available fuel volumes when supply of higher-quality grades is limited. The environmental class must be indicated at filling stations.

An import damper has also been introduced for diesel fuel. The mechanism is meant to compensate for the economic difference between imported fuel costs and domestic prices, keeping foreign supplies commercially viable. It applies when the export ban on diesel, kerosene, or middle distillates is in effect.

Another adjustment concerns exchange-traded gasoline sales. The mandatory sales quota has been reduced from 15% to 10% and extended through the end of 2026. For oil companies, this provides more flexibility in resource allocation, though independent filling stations become more sensitive to exchange supply volumes and pricing.

Market needs to wait for production recovery

In the coming weeks, the situation will depend primarily on how quickly Russian refineries can restore output. As long as production remains roughly a quarter below normal levels, administrative restrictions and imports will serve as temporary safeguards.

Seasonal demand should also gradually ease after the vacation period ends. This should help rebalance the market even without a full recovery in refining. But the situation can only be considered stable once gasoline output approaches domestic consumption levels with an adequate buffer.

So the baseline scenario for the market is gradual improvement, not an instant disappearance of the shortage. If refining recovers in the coming weeks and additional supplies from Belarus and other countries continue, the most acute phase could pass within two weeks to two months. However, if August's production decline proves persistent, the strain on imports and administrative measures will last longer.