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(Bloomberg) — Russia’s subsidy payouts to oil refiners that supply domestic markets jumped more than six-fold in June from a year earlier, as Moscow sought to avoid shortages by keeping more fuel at home.
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The government paid 210.6 billion rubles ($2.72 billion) to oil processors last month, partially compensating them for the difference between domestic and export prices, according to Finance Ministry data published Friday. That’s the largest monthly payout since December 2023, driven by high international fuel costs resulting from the disruption in the Strait of Hormuz.
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Bolstering domestic fuel supplies is a key focus for the Russian government after Ukrainian attacks on refineries caused worsening shortages around the country. The subsidies give companies an incentive to keep more oil products at home and offer them to consumers at lower prices.
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Without the billion-dollar payouts, domestic prices for diesel and gasoline would have shown more significant growth, raising the cost of living for Russians and stoking inflation — both of which Moscow wants to avoid ahead of parliamentary elections in September.
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The government continued to make the payments to refiners even after it banned most exports of gasoline through to the end of July.
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The oil and gas industries make up about a fifth of the Russian state’s total revenue, a crucial contribution to a budget that is burdened by spending on the war with Ukraine.
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The state’s total oil and gas revenues for June, net of all payouts to the industry, exceeded 683 billion rubles, up more than 38% from a year earlier, the data show. Oil taxes accounted for about 84% of that total.
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The Finance Ministry calculated June oil and gas taxes based on the average Urals crude price of $86.52 a barrel. While that’s lower than the level for May, it’s still up 66% from a year earlier as uncertainties over the re-opening of the Strait of Hormuz persisted.
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Global oil prices have fallen further in recent weeks as energy flows from the Persian Gulf recovered, meaning Moscow’s windfall oil revenue is set to decline from the highs seen earlier this year.
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