Published by Global Banking & Finance Review®
Posted on December 30, 2025
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleRussian oil exporters face deep discounts, but tax relief helps maintain profitability. Export margins vary by destination and logistics costs.
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.
(Reporting by Reuters, Editing by Louise Heavens)
Tax relief refers to a reduction in the amount of tax that an individual or business has to pay. It can come in various forms, such as deductions or credits, aimed at easing the financial burden.
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