Russia is facing a gasoline shortage which will likely lead to inflation a cause further chaos, experts have said. Recent Ukrainian strikes on oil refineries have caused a spike in gasoline prices across Russia and occupied Ukraine, the Insitute for the Study of War (ISW) reported. This will “likely result in increased consumer costs and increased business expenses across industries”, experts believe. The ISW added: “This increase would drive inflation expectations and also push overall inflation upwards by increasing both direct and indirect costs throughout the economy.”
It comes after Russia’s Central Bank lowered interest rates on July 25, which seems to have been a premature response to a temporary slump in the seasonally adjusted annual rate of inflation in June. This descreased rate together with oil problems will result in a plethora of damaging consequences for the Russian economy, those in the know say, leading to disarray.
The ISW added: “Increased petrol prices and a lowered interest rate, coupled with long-term increased payments to sustain military recruitment and augment the defense industrial base’s (DIB) labor force, however, will likely cause inflation to spike, weaken consumer purchasing power, devalue the ruble in the medium- to long-term, and create further macroeconomic instability in Russia.”
Reports suggest that recent Ukrainian strikes on 10 oil refineries in Russia disrupted at least 17% of the country’s refining capabilities.
This equates to roughly 1.1million barrels per day.
The damage also caused premium gasoline shortages in some areas of occupied Ukraine, and southern and far-eastern Russia.
Russia increased its crude export plan by 200,000 barrels per day in August, according to Reuters.
Specialists say change could increase oil revenue in the short-term, but is likely “adversely affecting” the domestic economy.
Several regions of Russia and occupied Crimea have started rationing at petrol stations, The Wall Street Journal reportedl, and the authorities have suspended the sale of A-92 gasoline to Russian residents in the Kuril Islands, Sakhalin Oblast, it is believed.
The ISW noted that Russia was struggling to keep up with domestic demand for petrol even before the recent Ukrainian strikes, and has placed intermittent bans on its export since 2022.
