Putin signs tax law to boost fuel supply amid deepening crisis

Russian President Vladimir Putin on Saturday signed a law amending the country’s Tax Code, introducing new excise measures aimed at incentivizing increased gasoline supply to the domestic market as Russia grapples with its worst fuel crisis in decades.

The law, reported by TASS and confirmed by the Kremlin, introduces an excise tax mechanism designed to encourage the production of high-octane gasoline through blending straight-run gasoline with other components. The legislation also adjusts Russia’s fuel-damping mechanism — which compensates suppliers for selling gasoline domestically — and provides subsidies for fuel imports, with compensation calculated using import parity prices based on indicative gasoline prices in India and transportation costs from Indian ports. reuters.com english.news.cn devdiscourse.com tradingview.com

A Crisis Sparked by Drone Strikes

The tax changes come as an estimated one-third of Russia’s refining capacity has been knocked offline by sustained Ukrainian drone attacks on oil infrastructure. More than 50 attacks on refineries and energy facilities have been reported since March, according to the Associated Press. Ukraine’s President Volodymyr Zelensky stated in May that nearly 40 percent of Russia’s primary oil refining capacity had been incapacitated. abcnews.com bbc.com apnews.com wsls.com click2houston.com

The resulting shortage has led to fuel rationing in roughly 90 percent of Russian regions, with drivers limited to 20–30 liters per vehicle and jerry-can filling banned. Russia’s State Duma approved the tax amendments on June 24, with lawmakers debating the crisis ahead of September’s parliamentary elections. One deputy publicly accused the government of concealing the scale of the problem. aljazeera.com meduza.io english.news.cn mezha.net

Ripple Effects Across Borders

Russia — once among the world’s largest exporters of refined fuel — is now importing gasoline from India, Kazakhstan, and Belarus, with plans to bring in 400,000 tonnes of petrol monthly. In an extraordinary move, Reuters reported Thursday that at least 200,000 barrels of jet fuel are set to load from Chiba, Japan, in the first half of July and be shipped via South Korea through intermediaries before heading to Russia. reuters.com kyivpost.com aljazeera.com

The crisis has also begun spilling into Central Asia. Bloomberg reported this week that Kyrgyzstan — which imports more than 90 percent of its gasoline from Russia — has appealed to Kazakhstan, Azerbaijan, Turkmenistan, and other regional partners to help ensure stable petroleum supplies. Uzbekistan is also experiencing rising fuel prices. ua.news bloomberg.com reuters.com

Despite the severity of the situation, Putin has publicly downplayed the shortages, telling state television last week that gasoline stockpiles are “only 4 percent lower” than usual. “Problems for motorists and businesses persist,” he acknowledged at a June 29 meeting with oil executives. “Unfortunately, there are also queues at gas stations.” news.bloomberglaw.com apnews.com