- Incentives are created for gasoline supplies to Russia from EAEU countries and foreign countries through increased payments under the import damping mechanism;
- The possibility of accruing the damping for companies producing gasoline obtained by mixing straight-run gasoline with other components is established;
- The timelines for modernization agreements for large refineries are extended.
All changes related to additional fuel supplies to the domestic market will apply to legal relationships that arose from June 1, 2026, and for the modernization of oil refineries from January 1, 2026.
On June 23, the budget and tax committee of the State Duma approved this bill.
Economics
The fuel market has been under increased attention since spring. Since May, the Federal Antimonopoly Service (FAS) has been sending recommendations to oil companies' executives to observe responsible pricing principles for petroleum products (the agency reported on another such letter on June 24). Meanwhile, the Ministry of Energy indicated that the situation in the domestic fuel market remains stable and controllable. The Kremlin has also noted no risks associated with providing fuel to the regions.
However, a number of regions and oil companies were forced to impose restrictions on fuel supply volumes at gas stations. On June 24, Rosstat reported that the index of petroleum production in Russia (a component of the overall industrial production index) fell by 13.5% year-on-year in May 2026 compared to May 2025. In April, the year-on-year decline was 9.1%. Over the month (compared to April 2026), petroleum production decreased by 2.3%. As a result, from January to May, the indicator decreased by 4.9% compared to the same period last year.
Purpose of the Damping Mechanism
The essence of the fuel damping mechanism is that by providing subsidies to refineries, the government motivates oil producers to supply more gasoline and diesel to the domestic market rather than for export. If it is more profitable to sell fuel abroad than domestically, the government compensates for the difference with exports through the damping mechanism, thereby stabilizing price dynamics. However, if domestic fuel prices exceed certain values, damping payments are eliminated.
Elimination occurs in the event of sharp price fluctuations. According to the Tax Code, if wholesale (exchange) fuel prices deviate from the established indicative prices by more than 20% for gasoline and 30% for diesel fuel on average over a month, damping for that month will not be paid. The indicative prices for 2026 are set at 62,300 rubles per ton for AI-92 gasoline and 58,950 rubles per ton for diesel fuel.
Gasoline prices in Russia increased by 0.9% in May compared to April, according to Rosstat data. Year-on-year growth accelerated to 12.9% from 12.3% the previous month. According to the agency's statistics, gasoline prices rose by 4.6% since the beginning of the year. The average consumer price for gasoline in Russia reached 67.7 rubles per liter by the end of May. The cost of AI-92 gasoline was 64.04 rubles, AI-95 was 69.65 rubles, and AI-98 and higher were 94.25 rubles per liter.
Why Increase Subsidies for Imports?
The mechanism for obtaining damping when processing Russian oil abroad followed by the importation of the produced fuel into Russia was legislatively established back in November 2025. Since then, processing Russian oil abroad has become economically comparable to processing domestically. Until now, the tool was effectively designed only for supplies from Belarus. Now the authorities are significantly expanding its scope and the amount of payments. RBC reported on June 1 that Vice Premier Alexander Novak had issued the corresponding directive.
The amendments confirm the possibility of obtaining damping when importing gasoline by organizations authorized by the government. For fuel produced in EAEU countries, the CAB_KOMP coefficient (one of the parameters of the damping compensation calculation formula for automotive gasoline) will be 0.85 in 2026 and will later decrease to 0.33 in 2027. "Currently, coefficients of 0.68 (for gasoline) and 0.65 (for diesel) are used, and the introduction of the increased coefficient of 0.85 for gasoline importers effectively means subsidizing the import of fuel from foreign countries," explains Sergey Tereshkin, CEO of the oil products marketplace Open Oil Market.
For gasoline produced outside the EAEU, a separate compensation calculation mechanism is being introduced. It will be determined based on the import parity price, which consists of the indicative price of AI-92 gasoline in the Indian market and the cost of delivery from Indian ports to Russia. This indicator will be determined by the Federal Antimonopoly Service (FAS).
Experts interviewed by RBC note that the new rules do not automatically mean the beginning of fuel supplies from India, but they create economic conditions for the import of gasoline from foreign countries if necessary.
The choice of the Indian market as a benchmark indirectly indicates that Russia will import petroleum products from India, which, in turn, has become one of the largest importers of Russian oil after 2022, believes independent energy expert Kirill Rodionov. In his opinion, the import of fuel from foreign countries is quite expected, as Belarus, which began increasing its fuel supplies to Russia in 2024, is limited by the scale of its own processing capacities.
Another potential supplier of petroleum products among EAEU countries could be Kazakhstan, but the country is currently unable to sharply increase exports. Significant volumes of Kazakh fuel supplies will only become possible after the commissioning of a fourth large-tonnage refinery with a design capacity of up to 10 million tons of fuel per year, Rodionov considers. The investment decision for the project is expected to be made at the end of this year. On June 24, Reuters reported, citing sources, on negotiations between Russia and Kazakhstan. However, agency sources assure that Moscow and Astana are discussing the import of only about 50,000 tons of AI-92 gasoline from Kazakhstan. The Kazakh side previously denied that it had received such a request.
At the same time, India is not the only potential supplier of fuel to Russia, says Dmitry Kasatkin, managing partner at Kasatkin Consulting. "The Indian market was chosen because it is one of the largest centers for refining and trading petroleum products outside the Western sphere and actively engages with Russian oil. The indicative price is used not so much as a directive for a single physical source of supply, but as a calculation base for an external alternative price," he explains.
He is supported by Tereshkin. He adds that the parity calculation is generally carried out considering transportation costs, which, in the case of India, are significantly higher than for the Dutch port of Rotterdam, which had been taken into account in the damping calculation until recently.
Another potential candidate for fuel supplies to Russia is China, according to Tereshkin. New refining capacities have been brought online in the country in recent years, alongside the electrification of passenger cars and gasification of freight transport. Therefore, free volumes of fuel may be released in the country in the future.
Analysts believe that stimulating fuel imports will help saturate the market during a crisis period, but the scale of the effect will still depend on the speed of recovery of Russian refineries, the absence of logistics issues, and control over fuel distribution in the regions. Kasatkin believes that the import damping appears to be a temporary safety measure. With the stabilization of Russian refineries and the restoration of fuel reserves, the need for imports should decrease; otherwise, the mechanism will begin to distort the economy of domestic processing.
The methodology for calculating compensations raises additional questions. As noted by Vladislav Gates, senior lawyer at the firm "Rustam Kurmaev and Partners," the size of the damping for gasoline outside the EAEU becomes a function of import parity, which the FAS calculates based on the indicative Indian price and the cost of delivery from Indian ports. "That is, a significant element of tax relief is determined not by law, but by the methodology of a single regulator, and this directly affects the principle of legal certainty: taxes and the conditions for their calculation must be formulated so that the payer understands their rights and obligations in advance, and irreconcilable doubts are interpreted in their favor," he explains.
According to Gates, until the FAS methodology is published and tested, importers will be unable to model the size of payments, which increases the likelihood of disputes over the correctness of the indicator itself.
How Authorities Plan to Quickly Increase Gasoline Production
Another major innovation in the Tax Code concerns the production of gasoline by mixing straight-run gasoline with other components. The amendments allow considering it in the total volume of produced gasoline and receiving damping for it, as well as excluding excise tax from the costs of straight-run gasoline used for mixing. Companies are given three months to gather documents confirming that high-octane gasoline has been produced from straight-run gasoline through mixing.
According to Kasatkin, the allowance to count gasoline produced by mixing straight-run gasoline with other components will be an important support for the market during periods of high seasonal demand and unscheduled refinery repairs. The technology itself is widely used in the industry and does not create issues for vehicles. However, this mechanism may raise questions regarding the control of the components' origin and the quality of the final product. Strict laboratory accounting, digital traceability of batches, matching volumes of raw materials and finished fuel, as well as selective independent checks will be required.
The main legal risk lies in the fiscal dimension, Gates adds. The excise tax deduction for straight-run gasoline makes "paper" mixing without actual production of high-octane gasoline attractive in order to receive the deduction.
Oleg Abelev, head of the analytics department at investment company "Rikom-Trast," reminds that some control instruments already exist. "There are GOSTs that define methods of control and compatibility of fuel during mixing. But crucial is the state control from Rosprirodnadzor and Rosstandart to prevent the release of non-compliant fuel," the expert believes.
To ensure the scheme works as intended, strict control at all stages is critically important, adds Vasily Kutin, analytics director at Ingo Bank. It is essential to ensure that the company is genuinely producing high-octane gasoline, not attempting to abuse the mechanism. Therefore, the amendments stipulate that companies are given three months to confirm that high-octane gasoline has been produced from straight-run gasoline to receive the excise tax deduction. Additionally, a rule has been introduced: if the buyer returns such gasoline, the paid excise tax will not be refunded. "But it is obvious that one cannot completely eliminate human factors or technical glitches in control, so supervision remains an important element," he concluded.
Why Authorities Are Extending Refinery Modernization
Another block of amendments concerns oil refineries investing over 100 billion rubles in modernization. The duration of modernization agreements between oil companies and the government will be extended until December 31, 2026. Previously, it was expected that the duration of agreements, which specify, among other things, tax benefits for investors, would expire in January of this year.
This is not a new benefit, but an attempt to preserve already initiated investment projects that have been threatened due to external factors, experts explain. "Large projects at refineries have objectively been delayed due to supply restrictions on equipment, import substitution of technological solutions, rising project costs, and unscheduled repairs following attacks on infrastructure," says Kasatkin. According to him, the government aims to maintain the investment cycle in oil refining.
Abelev adds that the delay will allow companies to retain their entitlement to tax benefits when part of the processing capacity is halted due to unscheduled repairs. This is expected to help complete deep processing projects and increase the output of light petroleum products, thereby reducing the market's reliance on emergency crisis measures.
However, experts agree that the current package of measures can only temporarily ease tension in the market. "Regulators are using the tools available here and now. These measures will lead to an increase in subsidies for the industry and may calm the market somewhat, but they will not change the situation globally, as everything hinges on the dynamics of supply at refineries," concludes Tereshkin.
Source: RBC
