Russian Deputy Prime Minister Alexander Novak meets with oil companies to discuss market

Russian Deputy Prime Minister Alexander Novak will meet with domestic oil sector representatives today.

Today’s meeting comes as the Russian government considers implementing a new price restraint on gasoline. At over $70/barrel, Urals crude oil futures have increased significantly in value relative to 2020. As global demand for fuel has risen, monopoly within the oil-dependent Russian economy has transferred these global price shifts to Russian consumers.

Moscow’s current push to manage rising energy prices follows projections of increasing inflationary economic pressure. Last month, Russia’s central bank assessed domestic consumer inflation at six percent, despite lower initial estimates, and increased its key interest rate for the second time this year.

Novak will likely press industry officials for a temporary price freeze on fuel. Given past agreements between the government and oil sector representatives, expect oil executives to also commit to increasing the amount of fuel supplied to the Russian market by three-to-five percent, in order to relieve short-term pricing pressure. However, as price restrictions expire in the months ahead, continuing depreciation of the Russian ruble and adoption of stimulus packages planned for later this year will likely exacerbate inflation, leaving Russia likely to exceed a 4.4 percent inflation rate throughout 2021.

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