Russian Federation product markets long-term outlook H1 2020

In 2019, total products supply was in a position of surplus in the Russian Federation relative to demand. A large diesel/gasoil surplus is growing while the fuel oil surplus is narrowing on the back of ongoing refinery upgrades, as well as run cuts at low complexity sites. Russia has a smaller surplus of LPG, naphtha, gasoline and jet/kerosene. Overall, the Russian Federation has a relatively flat total product surplus in the medium term as high fuel oil yielding refineries struggle with the new export duty system and are forced to reduce crude runs, while others, who have completed upgrades, see a recovery in margins and crude throughputs. It is important to note that rouble price developments do affect refinery operations, and strengthening oil prices coupled with a lag in the rouble recovery has been supporting crude throughputs in 2017 and 2018. In the long-term, relatively stagnant demand results in a stable total product surplus.