In July, the situation may change dramatically. To increase fuel supply in the domestic market, the list of fuel manufacturers eligible for budget subsidies has been expanded. Additionally, gasoline importers into Russia will also be able to receive these subsidies. However, no increase in tax revenues from the oil and gas sector is expected; quite the opposite, they are likely to decrease.
Taxes are paid based on the results of the previous month, meaning in June taxes are for May and in July for June. The price of Russian oil, Urals, used for fiscal payment calculations, has plummeted from $94.87 per barrel in April to $86.52 in May and to $63.52 in June. Taxes are paid in rubles based on the average monthly exchange rate against the dollar. The volume of oil production also matters, which has remained relatively stable since the beginning of the year, according to OPEC: 9.02 million barrels per day in April and 9.01 million barrels per day in May. June's statistics are not yet available, but production is likely to decline slightly.
In June, revenue to the treasury from the main industry tax on mineral extraction (MET) decreased by 45.6 billion rubles month-on-month. In July, further decline is likely due to the drop in the price of Russian oil in June, although this may be somewhat offset by a slight weakening of the ruble against the dollar (down by 54 kopecks). Here, it becomes crucial how much budget subsidies to oil producers can increase, which also depend on oil and refined product prices and the ruble exchange rate.
This discussion revolves around two types of payments: the aforementioned reverse excise tax and the damping mechanism (budget compensation to oil producers for the difference between domestic fuel costs and its export price). This funding was received by large oil refineries (refineries) on the condition of entering into investment agreements with the government for the modernization of production, producing fuel of no lesser than "Euro-5" standard, and fulfilling commitments to supply a specified quantity to the domestic market. The size of reverse excise payments is linked to the volume of processed oil at these refineries. Now, the quality requirements for fuel to receive the reverse excise and damping payments have been reduced, and payments become accessible to those producing fuel by mixing straight-run gasoline (the primary product of oil processing) with other components. This results in higher sulfur content in gasoline and decreased storage duration.
Additional budget payouts should incentivize oil producers to increase fuel production.As explained in a conversation with "RG" by Konstantin Simonov, head of the National Energy Security Fund, this measure is aimed at enabling oil companies to quickly increase gasoline output, even if lower quality, during periods of fuel shortages, thereby not losing reverse excise payments. The expert emphasizes that the modernization requirements for production have not been lifted; they remain the end goal for Russian refineries.
To increase fuel supply, importers will now also be eligible for damping payments. This decision will help avoid driving up domestic gasoline and diesel prices and make such supplies profitable for intermediaries. Previously, only Russian and Belarusian refineries could receive damping payments. Now it extends to gasoline imports: for fuel from EAEU countries, a coefficient of 0.9 will be established starting June 1, 2026, while a separate formula will be introduced for supplies from other countries based on import parity.
According to Daniel Tyun, CEO of DA-Consulting, the budget's expenses could see a noticeable, but not catastrophic effect in the first month. If we use May's parameters, each additional 100,000 tons of supported fuel could cost the budget about 2.5-2.7 billion rubles. If through mixing and imports, it is possible to add 500,000 tons per month, that amounts to an additional burden of 12-14 billion rubles. If this volume reaches 1 million tons, it could mean an additional 25-30 billion rubles monthly.
A similar view was expressed by Sergey Frolov, managing partner at NEFT Research, albeit with a caveat. Payments to importers and oil bases (gasoline production through mixing) are unlikely to significantly increase the lost treasury revenues, provided these forced measures do not last beyond 3-4 months.
At the same time, as Simonov notes, excise payments are tied to the price of our oil, while the damping mechanism is linked to the export price of oil products. As a result, payments for both will decline, even together with oil and gas revenues. Overall, these payments will not pose a significant challenge to budget revenues. The key is that they serve as an incentive for oil companies to ramp up production, the expert believes.
According to Sergey Tereshkin, CEO of Open Oil Market, the size of the payments will be influenced by the current correction in the oil market, which reflects the dynamics of external prices for oil products. Hence, damping payments for fuel producers are unlikely to exceed 200 billion rubles (210.6 billion rubles in June). Regarding payments to importers, the comparatively low import volumes will serve as a constraint.
Tyun believes that the measures taken can operate without causing significant harm to the treasury only as a short-term crisis solution – for a few months while refineries recover and the seasonal fuel shortage closes. If Urals remains above $60-65 per barrel, and imports and mixing remain limited, the budget could handle the additional payment of 10-30 billion rubles per month. However, if oil prices drop below $55-60, the ruble remains strong, and the damping payments exceed 200 billion rubles per month, then this mechanism could quickly erode oil and gas revenues. The main risk is that the decisions made currently treat the symptom rather than the root cause. The root cause is the decline in fuel production due to refinery issues. In this situation, the damping mechanism and reverse excise can stabilize prices and stimulate supply, but they do not replace physical refining, the expert underscores.
Source: RG.RU
