MOSCOW: In December, Russia witnessed a significant reduction in domestic liquefied petroleum gas (LPG) prices, which dropped by 50% compared to the previous month. This dramatic decline in prices, which saw wholesale LPG prices plummeting from 28,000 roubles ($280) per metric ton in November to around 14,000 roubles ($140) in December, is attributed to an oversupply of the fuel in the domestic market.
The drop in prices follows the European Union’s sanctions on Russian LPG, which were imposed on December 20. These sanctions, primarily driven by Poland, one of Russia’s key LPG importers, are part of the broader European restrictions against Russian energy exports. As a result of these sanctions, Russia has been unable to export as much LPG to European markets, leading to a surplus of the fuel within the country.
LPG, a mixture of propane and butane, is widely used as a fuel for vehicles, in heating systems, and for the production of various petrochemicals. The sharp increase in the supply of LPG in Russia has resulted in a significant drop in prices, as demand within the country has not kept up with the sudden influx of the fuel.
This price slump is a direct consequence of the EU sanctions, which are designed to reduce Russia’s energy revenue while the country faces ongoing international pressure due to its actions in Ukraine. While the price drop may provide some relief for domestic consumers, the long-term impact of the sanctions on Russia’s energy sector remains uncertain.
The collapse in LPG prices is expected to have ripple effects on both Russia’s domestic economy and the global energy market, as countries and industries adjust to these new supply dynamics.
