Blow for drivers as diesel prices jump after Russian export ban

vladimir putin
vladimir putin

Russia has banned exports of diesel in retaliation against western sanctions, raising fears of yet more pain for British motorists.

The European price of diesel instantly jumped by as much as 5pc in response to the news from the Kremlin, amid fears that it would worsen global shortages.

The ban comes as policymakers are already anxiously watching rising oil prices, which have risen by 30pc since June and are close to surpassing $100 a barrel.

While both the UK and the European Union banned oil imports from Russia earlier this year, other countries have continued to buy its fuel. Vladimir Putin’s move will likely tighten global diesel supply further and could drive up flagging inflation around the world.

Luke Bosdet from The Automobile Association said: “They’re working on the fact that diesel, like any other fuel, is a global commodity. Even if you squeeze it in China, you’re still gonna get a ripple effect across the globe. That’s basically what they’re trying to do.”

Russia exported nearly one million barrels of diesel a day last year, according to Vortexa. Its exports then made up 3.4pc of global demand, meaning restrictions could have significant impacts on global prices.

Mr Bosdet said that the ban comes at a time when British motorists are already facing higher prices and would “hurt”, despite having a smaller effect on pump prices than other factors.

He said: “The pump prices are already going up because of the higher cost of oil.”

Refineries have already been struggling to make enough diesel after the world’s second and third largest producers Saudi Arabia and Russia restricted oil supplies.

The export ban comes despite growing signs of pressure on the Kremlin’s budget.

Vladimir Putin is preparing to introduce a windfall tax on Russia’s metals and mining firms to shore up the country’s war economy, Bloomberg reported.

The new tax will look to funnel around $1bn into Kremlin coffers each month.

The levy could be introduced in the next three months, while the finance ministry is also pushing for new restrictions on the movement of cash.

The rouble has plunged by a third since the start of the year as Western sanctions and high military spending has hurt confidence in the currency. The plunging rouble has sent inflation soaring in Russia.

Moscow claimed the ban on diesel exports was only temporary and would help bring down fuel prices for ordinary Russians.

The export ban may have more wide-ranging implications for global inflation, as diesel is used in agriculture, fisheries and for long haul transport.

Mr Bosdet said: “It’s the workhorse fuel that fuels transport. What tends to happen is not only do you get the impact at the pump but the extra cost to transport then gets passed on to the consumer.”

Transport companies usually pass on increases in the price of diesel to their customers within a month, he said.

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