Russia's oil export duty set to slide in May, hitting refining margins

Russia’s oil export duty CL-EXPDTY-RU, a key source of tax revenue for the government, is likely to plummet in May to its lowest level in nearly two decades if oil prices stay low, Reuters calculations showed.

The expected sharp decline in duty paid by Russian oil exporters will encourage oil producers to sell crude oil and make refining it less attractive, hitting the profit margins of Russian refineries.

The duty is currently set at $52 per tonne for April. The Russian finance ministry will calculate the duty for May on the basis of prices of Russian Urals crude blend recorded between March 15 and April 14.

If Urals prices stay at around $19 per barrel, the crude oil export duty for May would be set at $7.5 per tonne. If the prices rise to $30 or $40 per barrel, the duty is expected to reach $10.5-$13.7 per tonne next month, according to Reuters calculations.

That would be the lowest level of oil export duty since at least 2002, due to the collapse of oil prices amid oversupply and restrictive measures taken to curb the global spread of the coronavirus.

Urals URL-E were trading at around $18.55 per tonne on Tuesday. (Reporting by Maxim Nazarov and Darya Korsunskaya; writing by Vladimir Soldatkin; editing by Susan Fenton)

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