Fuel price agreement agreed in Russia

RUSSIA / FSU POLITICS - In Brief 07 Apr 2019 by Alex Teddy
The oil sector has agreed to prolong its gentleman's agreement with the government to keep oil prices as static as possible. Vice Premier Dmitry Kozak was pleased to announce this on 5 April. The government considers it important to maintain price continuity as oil taxes are changing and oil refineries are pushing for greater compensation. The price differentials on oil markets are widening. The agreement is simply about keeping fuel prices down - prices cannot rise more than inflation. The agreement is to run for another quarter. The oil firms agreed only grudgingly.The agreement is informal and there is no signed agreement. This does not reflect well on Prime Minister Medvedev. The oil sector is clearly under pressure. Some people at the top of the industry have been replaced in recent months. OPEC+ has reduced production. The government does not seem to have a consistent strategy for refiners within Russia. The Arctic oil production plan has confused the situation even more. On the one hand the more oil a country pumps the better. On the other hand it will create oversupply and lower the price. The tax maneuver on oil has created more uncertainty. Various Russian oil companies are mulling a production cut. This militates against the idea of expanding production in the Arctic. The fuel price agreement was made in October 2018. The Federal Anti-Monopoly Service has questioned the legality of such an agreement. But does the government really want rising fuel prices to aggravate public discontent?

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