In the second and third readings, Russia’s State Duma approved a measure that shifts the calculation base for export taxation away from the Urals crude toward Brent crude as the reference price. This change, described during debates in the Duma, is tied to a new wage calculation framework that is slated to begin on June 1, as indicated by official Duma sources. The practical effect of this reform is that tax assessments on oil exports will reference Brent’s price rather than the traditional Urals benchmark, with the precise adjustments designed to keep the taxation consistent with the evolving market environment. The intention behind aligning the tax base with Brent is to reflect a more globally recognized pricing signal, which many observers view as more representative of international oil markets. In official summaries, the plan is presented as a way to standardize the method for computing export taxes in a way that aligns with broader energy price movements while retaining a clear, auditable framework for budgeting purposes and fiscal planning.
Under the new rule, a baseline is derived from Brent prices with deductive adjustments. Specifically, a deduction of $28 per barrel, which corresponds to $204 per tonne, would be used to determine the June 2023 tax. For July and subsequent months, the deduction is set at $25 per tonne, equivalent to $182.5 per barrel. In practice, this means that the deductions applied to the calculation of the export tax mirror the deductions used in the calculation of the mineral extraction tax framework (MET). The policy maintains a consistent structure across months, ensuring that the fiscal impact of price movements remains predictable for both the government and oil producers. At the same time, this approach preserves a direct link between Brent price shifts and the tax base, making the taxable amount sensitive to global price signals while anchoring it with a fixed per-barrel or per-tonne deduction. This helps to maintain comparability with prior methodologies while introducing a new price reference that is supposed to reflect international market dynamics more faithfully.
Earlier in Russia, a separate law introduced a revised method for determining the price of Urals crude when calculating taxes related to the extraction of mineral resources and additional income from hydrocarbon production. The reform sets constraints on how much the Urals price can be discounted in tax calculations. If the Urals price discount in a given month exceeds a set margin relative to Brent, the MET and additional income from hydrocarbon extraction (AIT) are calculated using the Urals price net of the capped discount. In April, that cap was set at $34 below Brent, and in May the discount threshold was adjusted to $31. This mechanism creates a ceiling on how much the Urals price can diverge downward from Brent in tax computations, thereby stabilizing the tax base against short-term price spikes or distortions. The policy implies that when Urals trades at a price that falls significantly below Brent, the tax calculations are anchored to a calculated Urals value that includes the specified discount ceiling, rather than relying solely on Brent. This approach aims to balance the government’s revenue goals with the need to avoid abrupt tax changes for producers when market spreads widen.
From the Ministry of Finance, estimates indicate that the average Urals price in March 2023 stood at $47.85 per barrel, marking a notable movement from March 2022 when the average was $89.05 per barrel. The ministry’s forecasts suggested a substantial reduction in the Urals value relative to the prior year, with the assessment noting a decline by a factor of roughly 1.86. These figures illustrate the volatility inherent in crude pricing and the challenge of maintaining a stable tax base in a market subject to rapid shifts in supply, demand, and geopolitical developments. While the reports from that period emphasize price deltas and discount rules, contemporary discussions among policymakers continue to examine how such price comparisons influence fiscal planning and the effective collection of oil-related revenues. Given the evolving nature of energy markets and the ongoing adjustments to price references, observers monitor how future updates might alter the relationship between Brent benchmarks, Urals valuations, and the calculation bases for MET and related taxes. Historical data thus serves as a reference point for understanding how current policy choices are intended to respond to market realities while safeguarding fiscal resilience for the budget.
Overall, the changes reflect a broader trend in energy policy toward integrating internationally recognized price signals into domestic fiscal calculations. By tying tax bases more closely to Brent, the government signals an intent to align revenue mechanisms with global market movements, while safeguards such as capped discounts for Urals help mitigate abrupt tax fluctuations that can arise from sudden price gaps. For industry participants, these developments imply a need to adapt accounting practices to the new price references and deduction schedules, ensuring accurate tax reporting and compliance across monthly cycles. As the regulatory framework continues to evolve, stakeholders will likely seek further clarification on computation rules, timing, and any transitional provisions that might accompany future amendments to the tax code. The aim remains to balance fiscal stability with transparent, market-linked revenue collection, a goal that policymakers in Russia have consistently emphasized in discussions about mineral extraction taxation and related fiscal instruments.