December 30, 2025
MOSCOW, Dec 30 (Reuters) – Discounts on Russian oil at export terminals have once again approached historic highs, putting pressure on exporters’ trade profits amid weak global oil prices, Reuters calculations show.
Western sanctions over Russia’s military action in Ukraine have forced its oil companies to sell crude at steep discounts, reaching $20 to $30 per barrel below Brent in December – the widest gap at Russian ports since early 2022, Reuters data indicates.
The deeper discounts have eroded margins, pushing some suppliers into losses. Still, many firms remain profitable thanks to government tax relief, according to Reuters data
“Income in the production segment, on average, remains positive after covering taxes, production, and transportation costs. Some oil projects are indeed ‘in the red,’ including due to the complexity of extraction,” said Kirill Bakhtin from BCS World of Investments.
TAX RELIEF KEEPS PRODUCERS AFLOAT
Preferential mineral extraction tax (MET) rates have been critical to maintaining profitability, analysts say. Reuters estimates that more than half of Russian oil producers qualify for zero or reduced MET rates, helping them cover costs and fund development.
Reuters calculations suggest companies benefiting from zero MET rates, about 20% of producers, earned trade profits of roughly $20 per barrel at December’s Urals prices. Export margins also vary by destination: shipments to Turkey may fetch prices $10 per barrel higher than Urals deliveries to China.
China mainly imports ESPO Blend crude, which trades at a $3–4 premium to Urals and is shipped from the port of Kozmino in the Far East, reducing freight costs for Russian exporters.
Companies facing full MET rates, expensive production, and complex logistics may operate at a slight loss of up to $5 per barrel, Reuters calculations show. However, most high-cost producers typically benefit from reduced MET rates.
Ownership of shipping fleets and field location also weigh on margins, as logistics expenses continue to erode profits, analysts note.
“The deeper discounts have eroded margins, pushing some suppliers into losses. Still, many firms remain profitable thanks to government tax relief, according to Reuters data.”
This means the mafia regime is not raking in the bucks anymore, but distributing what little it has left over after the war effort has burned the vast majority of funds. This year will show some interesting developments in mafia land.
Ukraine must keep up the pressure by continuously slamming oil depots and refineries and attacking oil tankers and oil terminals.
Those tax reliefs are not appearing by magic. The sheep are the ones that will ultimately pay. The increase in VAT by 10% this week will be one way to keep his oligarchs happy.
There’s only so much the mafiosi can milk from their skinny sheep before they dry and shrivel up completely.
Agreed. The limping imp has to keep the oligarchs happy and if he doesn’t, even the KGB won’t be able to protect him. What I’m worried about his the imp creating another conflict in the ME to raise prices again.