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Oil Rally Gives Kremlin a Headache as Gasoline Prices Spike

  • Weak ruble removes traditional damper for fuel costs
  • Government pressures oil companies to freeze wholesale prices
An attendant fills a customer's automobile with petrol at the fuel pumps at a Tatneft OAO gas station on the M7 "Volga" highway near Kazan, Russia, on Sunday, Aug. 2, 2015. The world's biggest oil companies are painting a grim picture of the future and speculators are listening.
Photographer: Andrey Rudakov

Rising oil prices have been a relief for Russia’s finances, but they’ve given the Kremlin a headache in the form of higher gasoline prices, hitting already-struggling consumers and fueling inflation.

Struggling to control the increases, the government summoned oil executives for a meeting on the issue late Wednesday. In the face of threats from top officials to limit lucrative exports -- what Deputy Prime Minister Dmitry Kozak called “extraordinary measures” -- the industry executives agreed to keep wholesale prices from rising any further and boost local supplies. But few think the relief will last.