Russia has achieved the impossible. A country with huge oil reserves is running out of diesel and gasoline. As a result they have announced an outright ban on the export of those commodities.
How this is possible is quite complex but, put simply:
1. Exports of crude oil have dropped significantly due to sanctions.
2. Refineries are less profitable. Up to 40% of capacity is idle.
3. Increased demand for diesel and gasoline have pushed the price up and the gov cannot afford the subsidies which bridge the gap between wholesale and retail markets.
4. The harvest should be in full swing now but the agricultural sector is short of fuel and cash to pay for it.
Hence the export ban in an attempt to take pressure off the price and increase domestic supply.
The Russian economy continues to suffer.
How this is possible is quite complex but, put simply:
1. Exports of crude oil have dropped significantly due to sanctions.
2. Refineries are less profitable. Up to 40% of capacity is idle.
3. Increased demand for diesel and gasoline have pushed the price up and the gov cannot afford the subsidies which bridge the gap between wholesale and retail markets.
4. The harvest should be in full swing now but the agricultural sector is short of fuel and cash to pay for it.
Hence the export ban in an attempt to take pressure off the price and increase domestic supply.
The Russian economy continues to suffer.