- Incentives are established for gasoline supplies to Russia from EAEU countries and far abroad through increased payments for the import damping mechanism;
- Possibility is established for companies to receive damping compensation for gasoline produced by blending straight-run gasoline with other components;
- The duration of modernization agreements for large refineries is extended.
All changes related to additional fuel supply for the internal market will apply to legal relations arising from June 1, 2026, and for oil refinery modernization from January 1, 2026.
On June 23, the State Duma budget and tax committee approved this bill.
Economics
The fuel market has been under increased scrutiny since spring. Since May, the Federal Antimonopoly Service (FAS) has been sending recommendations to oil company executives to adhere to the principles of responsible pricing for petroleum products. At the same time, the Ministry of Energy has stated that the situation in the domestic fuel market remains stable and controlled. The Kremlin has also not identified any risks regarding fuel supply for the regions.
However, a number of regions and oil companies have had to impose restrictions on the volumes of fuel dispensed at gas stations. On June 24, Rosstat reported that the index of petroleum product production in Russia (part of the overall industrial production index) decreased by 13.5% in May 2026 compared to May 2025. In April, the annual decrease was 9.1%. Over the month (compared to April 2026), petroleum product 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.
What is the purpose of the damping mechanism?
The essence of the fuel damping mechanism is that the government, by providing subsidies to oil refineries, incentivizes oil producers to supply more gasoline and diesel to the internal market rather than exporting it. If selling fuel abroad is more profitable than in the domestic market, the government compensates oil companies for the difference with exports through the damping mechanism, stabilizing price dynamics. However, if domestic fuel prices exceed certain values, damping payments are nullified.
Nullification occurs during sharp price fluctuations. According to the Tax Code, if wholesale (exchange) prices for fuel deviate from established indicative prices by more than 20% for gasoline and 30% for diesel fuel on average per month, no damping payment is made for that month. For 2026, indicative prices are set at 62,300 rubles per ton for AI-92 gasoline and 58,950 rubles per ton for diesel fuel.
In May, gasoline prices in Russia rose by 0.9% compared to April, as reported by Rosstat. Year-on-year, the increase accelerated to 12.9% compared to 12.3% the month before. According to the agency's statistics, since the beginning of the year, gasoline prices have increased by 4.6%. The average consumer price of gasoline in Russia reached 67.7 rubles per liter by the end of May. The price of AI-92 gasoline was 64.04 rubles, AI-95 — 69.65 rubles, and AI-98 and above — 94.25 rubles per liter.
Why increase subsidies for imports?
The mechanism for obtaining damping compensation for processing Russian oil abroad with subsequent importation of the produced fuel into Russia was legislatively established back in November 2025. Since then, toll processing of Russian oil abroad has become economically comparable to domestic processing. Until now, this tool had effectively been aimed only at supplies from Belarus. The authorities are now significantly expanding its application scope as well as the amount of payments. RBC reported on June 1 regarding this corresponding instruction by Deputy Prime Minister Alexander Novak.
The amendments formalize the possibility of obtaining damping compensation for the import of gasoline by organizations authorized by the government. For fuel produced in EAEU countries, the KAB_COMP coefficient (one of the parameters of the damping compensation calculation formula for automotive gasoline) will be 0.85 in 2026 and will decrease to 0.33 in 2027. "Currently, coefficients of 0.68 (for gasoline) and 0.65 (for diesel) are used, and the introduction of an increased coefficient of 0.85 for gasoline importers effectively means subsidizing the import of fuel from far abroad," explains Sergey Tereshkin, CEO of the petroleum products marketplace Open Oil Market.
For gasoline produced outside the EAEU, a separate compensation calculation mechanism will be introduced. It will be determined based on the price of import parity, which is composed 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 surveyed by RBC note that the new rules do not automatically imply the start of fuel imports from India, but they create economic conditions for the importation of gasoline from far abroad if necessary.
The choice of the Indian market as a reference indirectly means that Russia will import petroleum products from India, which has become one of the largest importers of Russian oil since 2022, according to independent energy expert Kirill Rodionov. He believes that fuel imports from far abroad are quite expected, as Belarus, which began increasing fuel supplies to Russia in 2024, is limited by the scale of its own refining capacities.
Another possible supplier of petroleum products from the EAEU could be Kazakhstan, but the country is currently unable to rapidly increase its exports. Significant volumes of Kazakh fuel shipments will only become possible after the commissioning of the fourth large-tonnage refinery with a designed capacity of up to 10 million tons of fuel per year. The investment decision on this project is expected to be made by the end of this year. On June 24, the agency Reuters reported, citing sources, that Russia and Kazakhstan are in negotiations. However, the agency's sources confirmed that Moscow and Astana are only discussing the import of approximately 50,000 tons of AI-92 gasoline, while the Kazakh side previously denied having received any corresponding 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 is chosen because it is one of the largest centers for the processing and trading of petroleum products outside the Western sphere, and it actively engages with Russian oil. The indicative price serves not as an indication of a single physical source of supply, but as a calculation base for an external alternative price," he explains.
He is supported by Tereshkin. He also adds that the import parity calculation typically considers transportation costs, which are significantly higher in the case of India compared to the Netherlands' Rotterdam hub, which had been used for damping calculations until recently.
Another potential supplier of fuel to Russia is China, according to Tereshkin. In recent years, new oil refining capacities have been introduced alongside the electrification of passenger vehicles and the gasification of freight transport. Therefore, in the future, there may be excess fuel volumes released in the country.
According to analysts, stimulating fuel imports will help saturate the market in a crisis period, but the scale of the effect will still depend on the speed of recovery of Russian plants, the absence of logistical issues, and control over fuel distribution across regions. Kasatkin believes that the import damping mechanism appears to be a temporary safety measure. Once the operations of Russian refineries stabilize and fuel stocks are restored, the need for imports should decrease; otherwise, the mechanism may begin to distort the internal refining economy.
Additional questions are raised regarding the very methodology for calculating compensations. As noted by senior lawyer at Rustam Kurmaev and Partners law firm Vladislav Gates, the size of the damping compensation for gasoline outside the EAEU becomes a function of import parity, which the FAS calculates based on the indicative Indian price and delivery costs from Indian ports. "This means that a significant element of the tax deduction is determined not by law, but by the methodology of one regulator, directly affecting the principle of legal certainty: taxes and the conditions for their calculation should be formulated so that taxpayers understand in advance the extent of their rights and obligations, and any ambiguities should be construed in their favor," he explains.
According to Gates, until the FAS publishes and tests its methodology, importers will not be able to model the size of payments, increasing the likelihood of disputes over the correctness of the indicator itself.
How authorities intend to quickly increase gasoline production
Another major innovation in the Tax Code concerns the production of gasoline through the blending of straight-run gasoline with other components. The amendments allow this to be included in the overall volumes of produced gasoline and receive damping compensation for it, as well as exclude excise tax from the cost of straight-run gasoline used for blending. Companies are given three months to gather documents confirming that high-octane gasoline was produced from straight-run gasoline through blending.
According to Kasatkin, allowing gasoline produced through blending of straight-run gasoline with other components will be an important support for the market during peak seasonal demand and unplanned refinery repairs. The technology is widely used in the industry and does not cause issues for vehicles. However, this mechanism may raise questions regarding the control of the origin of components and the quality of the final product. Stringent laboratory accounting, digital tracking of batches, comparison of raw materials and finished fuel volumes, as well as selective independent inspections will be required.
The main legal risk lies in the fiscal plane, Gates adds. The excise tax deduction for straight-run gasoline makes it attractive to formalize "paper" blending without actual production of high-octane gasoline solely for tax deduction purposes.
Oleg Abelyev, head of the analytical department of the investment company Rikom-Trast, reminds that some control tools already exist. "There are GOSTs (state standards) that define the methods for controlling and compatibility of fuel during blending. But the key is governmental control from the Federal Service for Supervision of Natural Resources and Rosstandart to prevent an increase in the volume of substandard fuel production," the expert believes.
For the scheme to work as an incentive, strict controls at all stages are critically important, adds Vasily Kutin, analytics director at Ingo Bank. It is essential to ensure that companies indeed produce high-octane gasoline and do not attempt 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 in order to receive the excise deduction. An additional rule has been introduced: if the buyer returns such gasoline, the excise paid will not be refunded. "However, it is evident that it is impossible to entirely eliminate human factors or technical failures in control; hence supervision remains an important element," he concluded.
Why authorities are extending refinery modernization
Another block of amendments focuses on refineries investing over 100 billion rubles in modernization. For them, the duration of modernization agreements between oil companies and the government has been extended to December 31, 2026. It was previously anticipated that the duration of agreements, which include tax benefits for investors, would expire in January of this year.
This is not about a new benefit but an attempt to preserve already initiated investment projects that have been threatened by external factors, experts explain. "Large projects at refineries have objectively shifted in timelines due to equipment supply restrictions, import substitution technological solutions, rising project costs, and unplanned repairs following attacks on infrastructure," says Kasatkin. The state aims to maintain the investment cycle in oil refining.
Abelyev adds that the deferment will allow companies not to lose their right to tax benefits when part of their refining capacities is halted due to unplanned repairs. It is expected that this will allow the completion of deep processing projects and increase the output of light oil products, reducing the market's dependence on emergency crisis solutions.
However, experts agree that the current package of measures can only temporarily alleviate pressure on the market. "Regulators are using the tools that are available here and now. These measures will lead to an increase in subsidies for the industry and may calm the market somewhat, but will not change the overall situation, as everything hinges on the dynamics of supply at refineries," Tereshkin concludes.
Source: RBC
