Gas Prices in Russia May Climb if Demands from India and China Drop

Will gasoline and diesel prices in Russia drop if India and China halt purchases of Russian oil due to new 100% US tariffs? That’s the pressing question after Brazil saw prices for meat, fruit, and coffee fall by 8–10% when the US imposed 50% import duties, increasing domestic supply.

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Gas station

However, Igor Yushkov, an expert from the Financial University under the Government of the Russian Federation, told Pravda.Ru that a similar outcome is unlikely for Russia’s refined oil products.

“I don’t think gasoline will get cheaper — on the contrary, it may become more expensive because our oil export revenues would significantly drop,” said the analyst.

Government May Slash Spending and Remove Fuel Price Stabilizers

Yushkov explained that in the face of falling export earnings, the government may respond with radical budget cuts, including canceling the fuel damping mechanism — a system that has stabilized domestic fuel prices since 2019.

“One of the government’s spending lines is the payout under the so-called damping mechanism. This covers the gap between global oil prices and the domestic level the government wants to maintain. To reduce budget expenses, the damping scheme could be abolished,” said Yushkov.

Global Prices Could Still Push Domestic Oil Prices Up

He further noted that if India and China stop buying Russian oil, global oil prices could rise due to tightened supply — ultimately affecting domestic prices as well.

“For Russian refineries, the price of oil could rise to near-global levels, minus transport costs,” Yushkov explained.

Taxes Make Up 80% of Gasoline Price

The expert also reminded that up to 80% of the price of one liter of gasoline in Russia consists of various government taxes and fees, which feed into the state budget. These will likely remain untouched.

Summing up the effects of rising global oil prices, budget cuts, and the need to maintain tax collection, Yushkov concluded that,

“on the contrary, fuel prices in the domestic market may rise.”

Russia Temporarily Bans Gasoline Exports

Two days ago, in response to rising domestic fuel prices, the Russian government imposed a complete ban on gasoline exports until the end of August. Authorities cited high seasonal demand and ongoing agricultural activity as reasons for the decision.