The price of AI-92 gasoline supplied from Russia has climbed to 800 USD per tonne, a 95 USD jump that is now rippling through the domestic fuel market, pushing pump prices up 250 MNT per liter while diesel falls 150 MNT, officials said.

Based on the exchange rate announced by Mongol Bank last week, one tonne of AI-92 fuel now costs 2.8 million MNT. Domestic fuel companies highlighted that the higher border price has forced them to raise pump prices by 250 to 300 MNT per liter, even as diesel prices ease by 150 MNT per liter under the same adjustment. The Ministry of Industry and Mineral Resources confirmed the changes took effect July 15, tied to the July border price shift from Russian supplier Rosneft and other companies. The Ministry noted that Russia supplies 97 percent of Mongolia’s oil imports, underscoring the country’s exposure to price and supply shifts inside Russia. It said it is closely monitoring the international situation, including developments inside Russia, and is implementing a range of measures to ensure uninterrupted fuel supply to the country.

Head of the Petroleum Products Department at the Mineral Resources and Petroleum Authority D.Davaabayar reported that the price of Russian fuel supplied to Mongolia moves directly with world market prices. He explained that fuel prices spiked sharply in 2022 after Russia launched what it called a special military operation in Ukraine, prompting the Government to secure a discounted purchase contract starting in January 2023. Under that contract, Mongolia had received AI-92 fuel at a fixed 705 USD per tonne for the past three years, insulating domestic consumers from swings in global oil markets. The agreement includes a clause allowing the border price to be renegotiated if world oil prices rise or fall by more than 30 percent over three consecutive months, a threshold D.Davaabayar said has now been crossed.

Since February this year, world oil prices have topped 100 USD per barrel amid the US-Iran war, he said. The average price stood at 100 USD in April and 90 USD in May, sustaining the kind of prolonged price swing that triggers the contract’s renegotiation clause. As a result, Russia raised the price of fuel supplied to Mongolia by 95 USD per tonne this month, from 705 USD to 800 USD, the first change to the fixed price since the discount agreement took effect.