Russian President Vladimir Putin has signed a decree on the so-called moratorium on the zeroing of the fuel damper. This measure is designed, according to the Russian Ministry of Energy, to stabilise domestic prices for petrol and diesel fuel.
The move is expected to make it more profitable to supply fuel to the domestic market rather than to export.
In a number of Russian regions and in occupied Crimea, fuel supply disruptions or price increases have been recorded in recent weeks. This is due to the failure of installations at oil refineries after Ukrainian drone strikes on them.
According to the latest data from analysts, a record number of oil refining units are now idle.
The essence of the fuel damper, according to the Russian edition of RBC, is that the government, by paying subsidies to refiners, motivates oil companies to supply more petrol and diesel to the domestic market rather than to export.
If it is more profitable to sell fuel abroad than domestically, the Russian authorities use the damping mechanism to compensate oil companies for the difference with exports, thus stabilising price dynamics. But if domestic fuel prices become higher than certain values, the damping payments are nullified.
Now, according to the decree signed by Putin, fuel damper payments for petrol and diesel fuel will not be zeroed out, even if domestic prices exceed the established threshold. In this way, the Russian authorities hope to incentivise oil companies not to seek to sell fuel abroad.
The moratorium will be in effect from 1 October to 1 May.
The same decree removes diesel fuel from excise duty, which is produced by mixing summer diesel with aviation paraffin. The Ministry of Energy stressed that the main task of the Ministry and the government – “to provide Russians and industry with fuel.
In early October, it became known that Russian tanker oil exports rose to their highest level in almost a year and a half amid Ukrainian drone attacks on refineries. Ports have almost reached their capacity limits, while refining has fallen to its lowest level since spring 2022, Bloomberg wrote.