(Bloomberg) -- Russia’s diesel exports dipped by nearly a third in the first two weeks of September as output fell amid seasonal refinery maintenance, while producers redirected more fuel to the domestic market following government efforts to ease prices.

In the first 13 days of the month, Russian oil companies exported some 63,000 tons of diesel per day, down 31% from an average for the first 30 days of August, according to a person with knowledge of the matter. Diesel export data includes deliveries to foreign buyers via sea ports and railways. 

While most of the fuel usually remains at home, Russian producers have been increasing supplies to domestic clients amid government calls to stabilize fuel prices ahead of presidential elections scheduled for March next year. The issue has previously caused protests, such as in 2018 when consumers across Russia rallied to demand cheaper fuel.

Read more: Russia Plans to Cut Sea Diesel Flow by Quarter This Month 

Diesel shipments from a major supplier are vital for the tightening global market even as Moscow faces Western sanctions for its war in Ukraine. The world’s oil refiners are struggling to produce enough of the fuel amid curbed crude supplies from Saudi Arabia and Russia, the biggest producers within the Organization of Petroleum Exporting Countries and its allies.  

Russia’s refineries are undergoing seasonal maintenance set to peak between the second half of September and mid-October. Diesel output fell by 5.5% to some 234,000 tons per day in the first 13 days of the month, the person with knowledge of the matter said.

Daily supplies of the fuel to the domestic market in the first 13 days of September increased by almost 1% compared to the August average, reaching around 155,000 tons per day, the person said.

“With a handful of sophisticated refineries in Russia’s European regions going down, diesel supply is set to go 9-10% lower” in September compared to the August daily average, said Victor Katona, head crude analyst at market intelligence firm Kpler. 

The nation’s producers will only supply as much to the domestic market as is physically necessary, given the attractiveness of export diesel prices, which in several key markets remain significantly above the $100-per-barrel price cap imposed by the Group of Seven industrialized countries on Russia’s premium petroleum products, he said. 

Fuel Prices

Domestic diesel retail prices as of Sept. 11 jumped by over 7.3% from the start of the year, according to the most recent data from Russia’s Federal Statistical Service. That compares with an increase of 3.9% in the consumer price index.

Russia’s government has been holding weekly meetings and is looking at several options to curb fuel price spikes, according to news reports. 

Among the measures under discussion, according to news reports from Tass and Interfax, is levying a prohibitively high duty on the export of oil products, with a compensation mechanism for producers who ensure sufficient fuel supplies to the domestic market. 

The proposed export duty would be set at $250 per ton both for dark and light petroleum products. That compares with $7.10 and $23.90 per ton set by the finance ministry for light and dark oil products respectively for October. Other options include an outright temporary ban on petroleum product exports, according to Tass.

The government is also weighing a ban on exports for companies that don’t produce the fuel but buy volumes at home and re-sell abroad. There is no final decision yet with discussions set to continue this week, according to media reports. 

(Updates with analyst comment in seventh, eighth paragraphs.)

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