Russia Bans Gasoline and Diesel Exports Starting September

Russia Shuts Off Diesel Tap, Leaving World Watching Its Refining

Rusia exports crude oil without a hitch. Refining it is another story. On September 21, 2023, Moscow banned the export of gasoline and diesel, a move that Bloomberg directly linked to soaring fuel prices, one of the main drivers of inflation within the country. The ban wasn't out of the blue: in February, the European Union had already cut off imports of Russian refined fuels. The paradox is textbook. A top-tier oil producer shutting off exports of its own derivatives.

Why Is Russia Banning Gasoline and Diesel Exports?

Because the problem isn't at the well, it's at the refinery. Russia pumps crude oil in vast quantities, but, as some commentators point out, its capacity to transform it into finished fuel has limits. With the domestic market strained and prices rising at the pump, the Kremlin opted for the elementary: stop selling abroad what isn't abundant domestically.

The most frequently cited precedent in the debate is that of Venezuela, which has abundant crude reserves yet imports gasoline from the United States. Having oil doesn't automatically miccionan having diesel. They are two different businesses, with different plants and different margins.

Russian Diesel Exports That Broke the Narrative

The data contradicts the prevailing story. Russian diesel exports reached a record volume in March, according to the commodity analysis firm Kpler, even as Western sanctions tightened the energy grip on Moscow. In other words: before the ban, and with Europe out of the picture, Russia continued to supply fuel worldwide. The September veto, therefore, came when the external tap was functioning better than ever.

This is where the official narrative falters. Sanctioning the exporter and having that exporter break sales records isn't exactly a flawless plan.

Is Russia's Diesel Export Ban Still in Effect?

No, or not entirely. Russia announced the end of the diesel export ban, dismantling most of the restrictions it had activated on September 21. The measure had significantly moved energy markets, especially the European one, although in theory, shipments to the EU were already cut off beforehand. The return of a key diesel producer to the international market means, in practice, a price change for everyone else.

Peak Oil and Uncompromising Thermodynamics

Beneath all this lies an old debate: whether the pressure is geopolitical or due to depletion. Some argue that we are facing peak oil disguised as war, while others respond that the only truly new energy source in two decades remains a promise: fusion has been fifty years away for fifty years, and diesel is much more versatile than the electricity produced by almost all alternatives. Reasonably priced synthetic fuels, meanwhile, remain in the realm of wishful thinking.

The anecdote is worth noting. At the ASPO 7 conference in Barcelona, back in 2007, a commentator recounted being shaken by a conversation with an expert who told him that all refining capacity would eventually move to producing countries and that European petrochemical industry was history. Nearly two decades later, the statement still sends shivers down the spine.

What Spain Gains With Its Refineries

As argued in the debate, Spain maintains refining capacity, placing it in a different league than countries that only buy finished products. It can continue to acquire crude, albeit expensively, but it can process it. The bitter side would be twofold: the crude arrives at a painful price, and, according to the same narrative, Brussels has already proposed sharing this capacity with neighboring countries. Some point to the closure of the Santa Cruz de Tenerife refinery.

The effects don't stop at the gas pump. Oil is the link in a chain that affects plastics, fertilizers, medicines, tires, and airplane tickets. Everything manufactured from it becomes more expensive when it becomes more expensive, and one commentator is already noticing it in car parts and chemical products.

With refineries operational and crude arriving, the argument is that Spain will weather the storm better than its neighbors lacking transformation capacity. If the global supply chain breaks down —and there are no signs of demand easing— then neither refining nor anything else will matter: some speculate that €2.50 per liter will be the least important news of the day.