What's Happening?
Russia has announced the suspension of a planned reduction in the fuel damper payment subsidy to oil refineries until May. The damper payment is designed to incentivize refineries to sell their products domestically rather than exporting them for higher prices. According to a Kremlin decree, the calculation of the damper payment will exclude a deviation threshold for gasoline and diesel from October 1 to May 1. Additionally, the decree exempts the production of winter fuel oil from excise duty when mixed with jet fuel outside oil refineries.
Why It's Important?
The suspension of the reduction in the fuel damper payment subsidy is a strategic move by Russia to stabilize its domestic fuel market. By maintaining the subsidy, the government aims to ensure that refineries prioritize domestic sales, potentially preventing fuel shortages and price hikes within the country. This decision may impact global oil markets, as it could alter the volume of Russian fuel exports. The exemption from excise duty for certain fuel productions may also encourage innovation in fuel blending techniques, potentially influencing future energy policies.
