Russia's domestic LPG prices halve in December following EU embargo on exports amid Ukraine war

Domestic prices of liquefied petroleum gas (LPG) in Russia halved in December from the previous month due to an influx of fuel, exports of which have been curbed by European sanctions. According to calculations by news agency Reuters, the European Union (EU) sanctions against Russia's LPG took effect on December 20. Poland, one of Russia's largest LPG importers, proposed the restrictions last year. LPG, or propane and butane, is mainly used as fuel for cars, heating, and the production of other petrochemicals.

According to Reuters calculations based on local commodity exchange, a sharp rise in LPG supplies to the domestic market led to a collapse in wholesale prices in Russia to around 14,000 roubles ($140) per metric ton in December from 28,000 roubles at the end of November. Exports are more lucrative, and Russia could earn up to $230 per ton in supplies to Poland.

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EU sanction on Russian oil

Still, some types of Russian LPG are eligible for export but account for around a fifth of the total LPG Russia used to export. According to Reuter's industry sources, Russia has recently increased LPG exports to China, Mongolia, Armenia, Georgia, and Azerbaijan. Traders told the news agency Russia's exports to China have the potential for further growth.

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Russia also exports LPG to Afghanistan, though market participants say payment issues constrain the supplies. "We would be ready to supply it there, but our Afghan partners are prepared to pay only in cash. And then what should we do with this 'cash'? Additional questions and problems may arise while bringing it back to the Russian Federation," a trader told Reuters.

Meanwhile, Russia launched a massive missile and drone barrage targeting Ukraine's energy infrastructure, striking a thermal power plant and prompting Ukrainians to take shelter in metro stations on Christmas morning. Ukraine condemned the attacks as ‘inhuman’ on Wednesday.

According to reports, the ongoing strikes from Russian forces on Ukrainian fuel and energy sources included 78 air, ground, and sea-launched missiles and 106 Shaheds and other types of drones. Ukraine's air forces claimed to have intercepted 59 missiles and 54 drones, with 52 more jammed.

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