Fuel sequence

ULAANBAATAR — The retail price of AI-92 petrol, one of the most widely used fuels in Mongolia, rose by MNT 500–550 per litre from October 12. Industry officials said the increase was mainly driven by higher import costs for fuel supplied from Russia, while also warning that supplies could decline during the final two months of the year.

According to B. Munkhtamir, deputy minister of industry and mineral resources, the price of fuel supplied from Russia rose by USD 190 per tonne in October compared with September. As a result, fuel importers and distributors were forced to revise their retail prices. Contracts have been signed to import a combined 78,000 tonnes of AI-92 and AI-95 petrol in October.

As of October 12, Mongolia had 14 days' worth of AI-92 petrol reserves and 31 days' worth of diesel fuel reserves, Bloomberg TV Mongolia reported. This highlights the continuing importance of whether supplies will remain stable for both consumers and fuel importers.

Efforts under way to increase supplies from alternative sources

Mongolia is heavily dependent on Russia for its fuel imports. Industry officials said the Russia-Ukraine war and disruptions at oil refineries in Russia were affecting supplies. In response, discussions are under way on the possibility of purchasing fuel from China, Singapore, Malaysia and South Korea.

The Government said in early October that it would take measures to ensure stable fuel supplies and reduce distribution delays and long queues. At a Cabinet meeting on October 7, it also decided to waive customs duties on petrol and diesel imported through designated border crossings, with the measure scheduled to take effect on October 21. The move is intended to reduce import costs and expand supply options.

Authorities to monitor the basis for price increases

Although higher import costs are driving the fuel price increase, transparency in the prices charged to consumers, companies' operating costs and distribution conditions remains important. Bloomberg TV Mongolia reported that the Rapid Response Headquarters had instructed officials to monitor whether companies were selling fuel imported in previous months at the new prices and whether they had raised retail prices without justification.

In the near term, conditions in the fuel market will depend not only on import prices but also on how much of the contracted supply actually arrives and whether negotiations to source fuel from alternative suppliers succeed. Maintaining stable supplies while mitigating the impact of the price increase is therefore the key challenge facing Mongolia's fuel market.