Russia-Ukraine War Flash Report - 27 FEB 24 02:45 PST - Russian Suspends Gasoline Exports for Six Months/Internet Outage

A spokeswoman for Alexander Novak, the Deputy Prime Minister, confirmed that Russia is banning all gasoline exports for six months, starting March 1. "In order to offset excessive demand for petroleum products, it is necessary to take measures to help stabilize prices in the domestic market."

Ukraine conducted a series of highly targeted drone strikes, damaging and destroying vacuum and atmosphere distillation towers and damaging one hydrocracker. The strikes reportedly reduced Russia's gasoline refinery capacity between 15% to 37%, depending on whose math you use.

We had assessed that the destruction of the distillation towers, coupled with the seasonal formulation changeover and high military consumption, could cause an export ban. Additionally, the spring planting season is coming, which will drive agricultural demand.

Russian fuel producers had said in December and January that the strikes could blunt production through February or March, but we were skeptical. Distillation towers will require Western parts, sneaking around sanctions, and months to rebuild. It is one part of the refinery where Soviet "shit and sticks" won't be good enough.

There are two possibilities. 

1) Attempt to manipulate global motor fuel prices. That's unlikely as Russia is not restricting the export of crude oil or diesel, and they aren't a large exporter of gasoline.

2) Russia is facing a fuel crisis due to Ukrainian drone strikes.

Don't bother watching the prices of spot market RBOB gasoline prices if you're in the United States. On February 29, anyone still holding unfulfilled contracts will dump them, and that usually creates an artificial price drop. It's a monthly ritual.

Russia only exports 13 to 15 percent of the gasoline it produces, mostly to Africa and the Middle East, so the impact on the federal budget won't be very significant. If the production shortfall is greater than 15 percent - then Moscow has problems. 

In other news, there are reports of another widespread Internet outage in Russia that started with Telegram, spread to YouTube, and is now hitting many websites and services. There are reports that point of sale and ATM systems are down. This is believed not to be related to a cyberattack.