Everything Is Fine? Kremlin Pumps Record Cash Into Struggling Refineries

In May, Russian authorities paid 204.3 billion rubles in compensation to oil refineries under the fuel damper mechanism, marking one of the highest monthly payouts in recent years. The surge highlights growing fiscal pressure tied to efforts to stabilize domestic fuel prices.

Bloomberg reports this, citing data from the Russian Ministry of Finance.

Compared to May of last year, the volume of payments has increased almost fivefold. The figure is only slightly inferior to the record set in April, when the Russian government transferred 207.5 billion rubles to the refineries.

The publication notes that the sharp increase in subsidies is due to two factors. The first is the rise in oil prices on world markets due to the aggravation of the situation in the Middle East. The second is the problem of the Russian oil refining industry after regular attacks by Ukrainian long-range drones.

Due to rising world prices, the Russian Ministry of Finance is forced to compensate factories for the difference between domestic and export fuel prices. At the same time, some enterprises need additional support following the damage they sustained from the strikes.

As Bloomberg notes, the large-scale payments have actually reduced the additional revenues of the Russian budget from the rise in oil prices. The Kremlin is forced to divert a significant share of funds to support the oil refining industry rather than replenish the state treasury.

It was previously reported that in Russia, the Syzran Oil Refinery in the Samara Region temporarily stopped operating after an attack by Ukrainian drones.

As a reminder, on the night of Wednesday, May 20, drones attacked the city of Nevinnomyssk in the Stavropol Territory of Russia. The strike likely hit the Nevinnomyssk Azot chemical plant, after which a fire broke out in the industrial zone.

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