Russia has a plan to ease the gasoline crisis: lower fuel standards, expand subsidies, and wait out Ukraine’s refinery strikes

Russia is going through an acute phase of its gasoline crisis. We’ve written before that several indicators — among them a drop in refining volumes to multiyear lows alongside high crude exports — point indirectly to a serious collapse in refining. All of this is unfolding against a campaign of long-range Ukrainian strikes on refineries and other targets deep inside the country. Panic is feeding the crisis, too, driven by a flood of reports from the regions about limits on how much gasoline any one customer can buy. In just the past couple of days:

• the Kursk region barred filling portable containers with gasoline;
• the Bryansk region imposed the same restriction;
• the Belgorod region adopted a range of restrictions across different gas station chains — Rosneft, for instance, banned sales into containers, while Gazprom Neft temporarily halted sales of AI-95 gasoline;
• the Khanty-Mansi Autonomous Region imposed “limits on the volume of fuel dispensed” that officials have not specified;
• Adygea introduced “temporary limits on how much passenger cars can be filled”;
• the Samara region introduced a two-week cap of 40 liters (about 11 gallons) of gasoline and 100 liters (about 26 gallons) of diesel for passenger cars and stopped dispensing fuel into containers;
• the Lipetsk region, through June 28, capped fills at 30 liters (about 8 gallons) of AI-92, -95, and -100 per car and barred buying fuel in a separate container.

These announcements are meant to cool the frenzy at the pumps and bring supply and demand into balance. So far, though, the effect seems to be the opposite: this cluster of signals is prompting drivers to stock up where they can, ahead of an even more sweeping shortage. All the more so given that perhaps the most dramatic Ukrainian attack of recent weeks is still fresh in memory — a massive strike on a key refinery in Moscow’s Kapotnya district.

That discussion is happening on an emergency footing. On June 23, the newspaper Vedomosti reported on the plan the government is preparing to rescue the fuel market.

The first measure that could offset the shortage is to loosen the quality requirements for fuel produced by Russian refineries. On June 15, the newspaper Kommersant reported that the authorities had allowed plants to supply the domestic market with Euro 3-grade gasoline and diesel rather than the Euro 5 grade required by the technical regulations of the Eurasian Economic Union. More precisely, they first permitted this in the fall of 2025, when Ukrainian forces were also hammering Russian refineries, and have now extended the arrangement.

In practice, this means gasoline can contain up to 150 milligrams of sulfur per kilogram, rather than the 10 the rules call for. Euro 3 fuel also contains additives and impurities that foul a car’s engine. When it burns, the engine, exhaust system, and catalytic converters wear out faster, experts surveyed by Kommersant warned. Even so, the authorities are counting on the measure to increase fuel output — though it is unlikely to make up for all the refining lost to the Ukrainian attacks.

There are. The second mechanism the government wants to use is a temporary cut in the share of gasoline that must be sold on the exchange.

Officials want to lower the figure for refineries from 15% of their output to 10%. The freed-up fuel is meant to bail out farm producers (more on how the crisis affects them below) and other consumers deemed socially important.

This measure, too, has an obvious downside: cutting supply on the exchange could deepen the gasoline and diesel shortage at independent chains’ stations, which are already losing out to the big national players as the crisis unfolds.

Officials plan to fill the domestic market through imports. And the authorities appear ready to subsidize those imports: as one of Vedomosti’s sources put it, the damper mechanism will be reworked for this purpose — “so that the government has the ability to make payments under it when oil products are imported.”

To quote Sergey Vakulenko, a senior fellow at the Carnegie Russia Eurasia Center in Berlin and one of the leading experts on Russian oil and gas: thanks to this mechanism, “gasoline is sold to the public at a price 20 to 30 rubles below its true market value, which further stimulates consumption.”

But the subsidy is available only for fuel sold by Russian companies, which limits imports:

Now, it appears, the authorities are ready to extend the mechanism to foreign importers as well.

This will clearly cost the budget billions of rubles. And the fuel price subsidy mechanism already costs 200 billion rubles a month — a drain that has kept the government from fully benefiting from high global oil prices during recent wars in the Middle East. Whether a treasury strained by a large deficit can absorb the additional expenditures is anyone’s guess.

According to Vakulenko, “stimulating demand by keeping prices below equilibrium during a shortage looks like madness.” And yet the government is doing exactly that, prioritizing social stability over market logic.

The industry’s most powerful figure — Rosneft head Igor Sechin — made the following proposals in a letter to President Vladimir Putin:

• suspend the rule under which producers of Euro 5-grade gasoline and diesel are subject to exchange-sale quotas of 15 and 16%, respectively;
• require producers of Euro 3-grade fuel to sell their entire output on the exchange;
• require all oil companies to send at least 30% of the crude they extract to refineries inside the country;
• change how exchange sales are calculated for vertically integrated oil companies — taking into account the needs of their gas station networks, as well as deliveries under state contracts and to essential-services providers;
• give priority access to the exchange to end buyers of gasoline and diesel rather than resellers, who “maximize their own profits.”

That last point, in particular, could help independent gas station chains. Then again, on the exchange they often operate through intermediaries, so how the authorities will define “end buyer” status has yet to be worked out.

There is one option that would be ideal: an end to the wave of attacks on Russian refineries. Such a scenario is possible only if either Russia’s armed forces develop effective new defenses against the strikes or Ukraine’s arsenals run dry.

But neither looks likely for now: the strike on the Kapotnya refinery showed that Russia’s air defense system is vulnerable even at its best-protected point, and it is very hard to believe that Ukraine and its Western allies, having found a weak spot in the Kremlin’s strategy, would give up an effective long-range campaign.

This brings new urgency to talk of at least a temporary freeze in the conflict. Putin has already softened the hawkish rhetoric he was voicing only recently at the St. Petersburg International Economic Forum, and has said Russia is ready to negotiate — but only on condition that Ukrainian troops withdraw from the Donetsk region, something Kyiv rejects. Otherwise, Putin is still threatening to seize the region by military force.

The bleak answer: everyone. But while short-term interruptions in gasoline supply can still be managed, especially in summer, far more serious problems loom. Chief among them: a food crisis driven by a sharp jump in diesel prices. Since late April, the price of diesel on the exchange has risen by more than 40%.

Meanwhile, the harvest season is getting underway in Russia. “We’re seeing both rising wholesale prices and shortages,” an employee at a Russian agribusiness told Forbes on condition of anonymity. “If the trend doesn’t change, farmers obviously won’t be able to secure enough fuel to carry out a full harvest.”

The best help would probably be to expand the ban on fuel exports that already applies to non-producers. Sergey Kaufman, an analyst at the financial group Finam, told Forbes that Russia “in a normal situation exports roughly 40% of the diesel it produces, so the margin of safety is large and has not yet been exhausted.” And the authorities openly acknowledge discussing the measure.

Many experts, though, disagree that an export ban alone would solve farmers’ problems: they propose pairing it with other steps — raising the mandatory exchange-sale quota, prioritizing deliveries to farming regions, monitoring small-wholesale trade, and setting special shipment schedules tied to harvest work, for example.

The acute phases of a crisis trigger runs on the stores selling the scarce product, but they don’t necessarily mean the crisis itself is as deep as its media coverage makes it look. Then again, we don’t know the true scale of the current problems in the fuel market, and we can’t be sure the authorities and the oil companies can pull the country out of its gasoline tailspin quickly.

A more practical step is to install an LPG conversion system in your car. More and more drivers are turning to this option, experts and market players told Kommersant FM, and it lets them cut their fuel costs almost in half. The catch: installing such a system will cost at least 45,000 rubles. It also requires modifying the car itself and isn’t suitable for every model. And finally, the surge in demand is inevitably driving up the price of the LPG itself. Over the past week, exchange prices for propane-butane have climbed 30% — to their highest level since the fall of 2024.