Russian oil companies received more than 716 billion rubles ($9.95 billion) in state support payments in April and May as the country’s refining sector grappled with repeated Ukrainian drone attacks and declining processing volumes.<\/p>\n
In May, oil companies received 204.3 billion rubles ($2.84 billion) through Russia’s fuel price stabilization mechanism, known as the damping system, and another 153 billion rubles ($2.13 billion) in refinery tax rebates, according to<\/a> Finance Ministry data. <\/p>\n Combined, the payments amounted to roughly 40% of the 872.9 billion rubles ($12.13 billion) in mineral extraction tax revenue collected from the oil sector that month.<\/p>\n State support was even higher in April, when oil producers received 207.5 billion rubles ($2.88 billion) through the damping mechanism and 151.8 billion rubles ($2.11 billion) in tax rebates. The payments were equivalent to about 46% of the 771.3 billion rubles ($10.72 billion) in oil-related mineral extraction taxes collected during the month.<\/p>\n The damping mechanism compensates refiners for selling fuel on the domestic market when export prices are higher, while the tax rebates are intended to support refinery operations.<\/p>\n Analysts at Raiffeisenbank said<\/a> the increase in compensation payments reflects growing difficulties in the refining sector. <\/p>\n Russian refineries were targeted by drones 38 times between January and May, including attacks on 16 facilities last month alone, the highest monthly total since the start of the war.<\/p>\n As a result, refinery utilization has fallen 14% since the beginning of the year and remains about 20% below prewar levels, according to calculations by energy analytics firm OilX.<\/p>\n The rising subsidies are offsetting much of the budget’s windfall from stronger oil prices. Brent crude climbed as high as $95 per barrel in April before averaging around $87 in May.<\/p>\n According to economist Kirill Rodionov, the growing volume of refinery support payments is offsetting much of the benefit to the budget from stronger oil prices.<\/p>\n “The growth in refinery subsidies largely neutralizes the effect of increased mineral extraction tax revenues,” economist Kirill Rodionov said<\/a>.<\/p>\n Although Russia’s oil and gas revenues rose 34% year-on-year in May, cumulative energy revenues for the first five months of 2026 remain 30% lower than during the same period last year, Rodionov said.<\/p>\n “A decline will also be recorded for the first half of the year,” he added.<\/p>\n Despite the growing state support, fuel prices have continued to rise.<\/p>\n Benchmark AI-92 gasoline prices on Russia’s commodity exchange have increased<\/a> 6% since the beginning of May and 30% since the start of the year, Rodionov said. AI-95 gasoline has risen 12% since early May and 38% compared with the end of December.<\/p>\n Retail fuel prices have also accelerated. According to state statistics agency Rosstat, gasoline prices rose 4.77% during the first five months of the year.<\/p>\n That increase exceeds the pace recorded by the same point in any year since Russia launched its full-scale invasion of Ukraine in 2022, according to<\/a> Janis Kluge, a Russia expert at the German Institute for International and Security Affairs.<\/p>\n Last year, Ukrainian attacks on Russian refineries caused<\/a> an estimated 1 trillion rubles ($13.9 billion) in losses for oil companies.<\/p>\n To help finance refinery repairs this year, the government is considering allowing wholesale and retail fuel prices to rise by 1.5 rubles per liter, business daily RBC previously reported<\/a>, citing sources familiar with the discussions.<\/p>\n