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Halt of Belarusian gasoline supplies: what will happen to prices in Ukraine

Gasoline prices in Ukraine: what the consequences of suspending supplies of Belarusian fuel will be. Photo: pixabay / ResoneTIC

Gasoline prices in Ukraine: what the consequences of suspending supplies of Belarusian fuel will be. Photo: pixabay / ResoneTIC

The Ukrainian information space was stirred by the news that Belarus would suspend supplies of A-95 gasoline, since the Belarusian Oil Company has not yet confirmed them for June for Ukrainian customers. This gasoline occupies about 50% of the Ukrainian market, so Ukrainians have begun to worry about a possible shortage of fuel and its rise in price in the country. The Page has been figuring out whether to fear this and who actually will have the worst of in such a decision.

Halt of gasoline supplies from Belarus: reasons

The reasons for the suspension of A-95 gasoline supplies are currently unknown. However, Deputy Minister for Economy Development Taras Kachka wrote on his Facebook page that this is due to technological processes at the enterprises of the Belarusian producers and one should not expect long-term consequences for the import of gasoline from Belarus.

Quote"Supply diversification policy will be enhanced. Until then, don't panic," he wrote.

Oleksandr Sirenko, an analyst at UPECO consulting company, agrees that this situation is related to technological processes, and not to political ones (it is about the forced landing of a Ryanair plane in Minsk and the detention of Belarusian journalist Roman Protasevich). According to him, these two situations should not be linked. In a comment to The Page, he said that there is no logical explanation for this situation, since Belarus has reserves of this gasoline grade. Artem Kuyun, an analyst at Consulting Group A-95, also confirmed that this is most likely a technological rather than a political problem.

Deficit and rise in price of gasoline in Ukraine due to halt of A-95 supplies

Consulting Group A-95 believes that if the supply of A-95 gasoline from Belarus halts, the market may have a deficit, since the average monthly supplies of this grade in 2021 amounted to 55,000 tons, or about 50% of the market, the specialized publication encorr writes.

Quote"The shortage of 50% of supplies will have consequences for the market. It can be partially compensated by Lithuania, but it is unlikely that the plant will be able to supply more than 10,000-15,000 tons. It is possible to import by sea, but no one has done such supplies for a long time, and the technological ability to promptly accept and unload them is unknown," director Sergei Kuyun, Director at Consulting Group A-95.

At the same time, a top manager of one of the largest petrol station chains told Liga.net that gasoline prices in June could potentially rise by 1 UAH only due to logistics and markups of wholesale suppliers, adding that "this has never happened."

However, analysts polled by The Page are more optimistic. So, according to Artem Kuyun, "nothing terrible will happen."

«I urge everyone not to create this panic at all—nothing terrible will happen. First, the A-95 is not the only gasoline, the A-92 remains. This, of course, is bad for the country in terms of the fact that someone may not look for alternative sources, but make 95 grade from 92 grade. But even if we take everything honestly, it will be possible to replace these volumes from other countries or by sea transport. Therefore, I think that everything will be fine, there will be no crisis. In addition, there are stocks on the market and an understanding of where to get gasoline, except Belarus.»

Artem Kuyun

Artem Kuyun

analyst of the Consulting Group A-95

As for the cost, Artem Kuyun notes that it will most likely be the one set by the Cabinet of Ministers, since now state regulation is in effect for the A-95, so the price will definitely not be higher. According to him, it will depend on the quotations of North-Western Europe that do not depend on Belarusian suppliers.

Sirenko also agrees with the analyst. He says that Ukrainian producers are ready to compensate for the supply gap by increasing production in June. And as for the price, then, according to him, there is no reason to increase the cost of resources.

Quote"The price will only change in the wholesale segment, but I'm not sure that the end user will notice any movement," he says.

What are the consequences of the gasoline supply suspension to Belarus

Experts agreed that the suspension of gasoline supplies to Ukraine would have a bad impact on both the Belarusian Oil Company and the country itself. So, Sergei Kuyun called this decision "the worst that Belarusians could make in the current situation," since their product has 50% of the market.

Artem Kuyun says that each such disruption forces Ukrainian traders to look for ways to diversify supplies, and over time they will become wider, and this will obviate the need in Belarusian gasoline more and more.

"The Belarusian side will lose, since Ukraine is a premium market for them, we pay well. As a result, they will lose part of the market. I think that after the repairs [of Mozyr Oil Refinery—The Page] they will resume the shipment, but this is a bad sign. It should be expected that when concluding long-term contracts for 2022, Ukrainian traders will recall the hot June and reduce volumes, because there is no point in signing contracts with a party that does not fulfill them. In this case, the Ukrainian producer wins, since the situation will level out in his favor," Sirenko summed up in turn.

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