Russia plans caps on crude oil discounts to as low as $25 per barrel

Proposal: Discount of $34 in April, $31 in May, $28 in June and $25 in July'

moscow
Photo: Bloomberg
Reuters Moscow
2 min read Last Updated : Feb 12 2023 | 11:06 PM IST
Russia’s State Duma introduced a bill late on Saturday setting discounts for Russian oil exports, according to the lower house of parliament’s website.

Under the draft proposal, the discount on dated Brent oil will be limited to $34 per barrel in April, declining to $31 in May, $28 in June and $25 in July.

The government has been debating how to calculate Russia’s taxable oil price following the European Union’s import ban and the resulting lack of a reliable price-setting mechanism.

Russia currently uses Urals price assessments in Europe’s Rotterdam and Augusta ports, provided by commodity price reporting agency Argus, to determine its mineral extraction tax, additional income tax, oil export duty and reverse excise on oil.

On Friday, Reuters reported that Russia plans to fix the price of Urals crude oil at $20 per barrel below dated Brent for tax purposes after state oil revenue slumped in January.

Moscow relies on oil and gas income to fund its budget, but has been forced to start selling foreign currency reserves to cover a deficit that stretched to 1.76 trillion roubles ($24.8 billion) in January to cover the cost of the military operation in Ukraine.

Urals crude differentials to dated Brent slipped to minus $30 a barrel in December from minus $24 in November, remaining sharply below the single-digit discounts seen prior to 2022.

Russia said on Friday it will cut oil production by 500,000 barrels per day, or around 5 per cent of output, in March, following the West’s imposition of price caps on Russian oil and oil products.

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :RussiaCrude OilExports

Next Story