Russia Uses Price Floor for First Time to Protect Government Oil Revenue From Sanctions
- $15 Urals discount used to calculate producers’ tax in January
- Nation is shielding revenue as sanctions enforcement toughened
Rail wagons for oil cargo at a refinery in Russia.
Photographer: Andrey Rudakov/BloombergThis article is for subscribers only.
Moscow has for the first time ever activated its so-called price floor mechanism to shield the flow of petrodollars to its state budget from Western energy sanctions.
The nation’s oil producers are footing the bill, underscoring how protecting the flow of petrodollars into state coffers is a key priority for the Kremlin. Russian oil and gas industries generate around a third of total budget revenue — several billions of dollars every month — and Moscow is using the money to finance its war against Ukraine and to raise social spending ahead of presidential elections in March.