Mongolia diversifies fuel imports as demand reaches 3.1m tonnes

Mongolia began buying Euro-5 fuel from Kazakhstan, China and South Korea as annual oil-product consumption rose from 1.7 million tonnes to 3.1 million tonnes in four years. The procurement decision gives Kazakhstan’s petroleum-product exporters a new market while Mongolia seeks to cover higher demand, stabilize its domestic market and reduce dependence on one supplier.

“Monthly gasoline consumption usually stands at around 70,000 tonnes, but reaches 100,000 tonnes a month in summer,” said Batbayar Munkhtamir, Mongolia’s Deputy Minister of Industry and Mineral Resources.

“Therefore, so Mongolia does not depend on one country for fuel supplies and can meet growing consumption, it is diversifying import sources and has started importing Euro-5 fuel from countries such as China, Kazakhstan and South Korea,” Munkhtamir added.

Russia continues to deliver oil products without interruption despite pressure on its own fuel market. Russian deliveries increased from 47,000 tonnes in August to a planned 70,000 tonnes in November.

Why did Mongolia’s fuel market tighten?

The four-year rise in Mongolia’s annual demand coincided with wider economic activity, higher production and freight volumes, and growth in the number of cars. In early October, the authorities recorded a sharp demand surge. Then came the queues.

Fuel stations developed queues lasting several hours, and scarcity produced speculation in “coupons,” which sellers offered for the right to take a place in a refuelling queue.

Two constraints now collide. Consumption nearly doubled over four years, so Mongolia needs more fuel even after the queues disappear. The October surge and coupon trading show a second constraint: consumers faced limited access to existing supplies. New cargoes address the volume problem more directly, while retail regulation seeks to control access.

The government is considering additional retail-market regulation and a wider import program, but the measures may not resolve the shortage quickly. The Central Bank of Mongolia expects the fuel crisis to last until 2027. Under one regulator scenario, Russian AI-92 gasoline deliveries could fall by about 30% by the end of 2026.

Long-term contracts matter because a potential 30% cut in Russian AI-92 deliveries falls at the end of 2026, when Mongolia already needs a larger import base. Signing contracts with several suppliers in advance spreads the risk of one cargo stream shrinking.

Which suppliers are entering the market?

Supply diversification does not mean Russia has left the market. Mongolia continues to receive uninterrupted Russian cargoes, while South Korea and China have joined the supplier list. China’s aviation-fuel purchase also broadens the product mix beyond the fuel sold at filling stations.

South Korea has agreed to supply at least 50,000 tonnes of fuel every month. China delivered Mongolia’s first aviation-fuel cargo, comprising 1,000 tonnes.

Authorities had also considered additional deliveries from Kazakhstan and Belarus and imports from Singapore and Malaysia.

What does the opening mean for Kazakhstan?

For Kazakhstan, Mongolia opens another export direction for oil products. The opportunity fits Mongolia’s goal of spreading purchases among several countries and maintaining uninterrupted fuel supply for a growing economy.

The Mongolian ministry did not disclose the actual scale, price or contract terms of Kazakh deliveries. It also gave no volume or timetable for the new import channel, so the opening represents a market opportunity rather than a quantified supply contract.

Kazakhstan has also extended its ban on gasoline and diesel exports, another policy condition surrounding the new export opportunity. The available information does not explain how that restriction relates to future Mongolian contracts.