Date: 16 March 2022 Author: Grzegorz Kuczyński

As Oil Price Drops, Russia Hikes Export Tariffs

The Russian oil-export duty will grow in early April this year, the Russian government announced amid a new trend of declining oil prices worldwide. As the Russia-Ukraine war has so far influenced a price increase, what might also worry many is a possible slowdown in the Chinese economy and Western efforts to look for new energy supplies to curb reliance on Russian energy and thus push prices down.

SOURCE: media.gazprom-neft.ru

From April 1, 2022, onwards, Russia’s oil-export duty will grow by $2.9––to $61.2 per ton from $58.3 now, the Russian finance ministry said in a statement. Customs tariffs on light petroleum products and oils will increase from $17.4 to $18.3 while those on heavy petroleum products––to $61.2 from $58.3. A bigger oil-export duty means more money for Russian state coffers. Globally, Brent and WTI crude futures steadied below $100 per barrel, which is less than when Russia went to war with Ukraine. Furthermore, the novel coronavirus continues to spread throughout China in a move that could massively affect the country’s growth and its appetite for crude oil. Some reports say mainland China is facing its worst Covid-19 outbreak since the height of the pandemic. China’s government has locked down the southeastern city of Shenzhen as it tries to contain the outbreak across multiple provinces. Economically, all eyes are now on China while the Russia-Ukraine war is put on the back seat. Nonetheless, traders remain optimistic in the context of revamped diplomatic efforts and new rounds of Russia-Ukraine negotiations. It is possible to add more crude to the market by easing U.S. sanctions against Venezuela and concluding a nuclear program deal––if it is struck, Washington will ease tough restrictions on Iranian crude. Despite pressure from the United States and the United Kingdom, the biggest oil-producing states––the United Arab Emirates and Saudi Arabia––are not planning to increase output.

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