Russia is forced to pay billions in compensation to its oil refineries from the budget

In May 2026, the Russian government paid the country’s oil refineries a record 204.3 billion rubles (about $2.8 billion) as part of the so-called fuel buffer. 

This figure is nearly five times higher than payments for the same period last year and came very close to the April level (207.5 billion rubles), which was the highest monthly total since December 2023. 

The sharp jump in budget spending on subsidies for oil refiners is driven by two key factors:

• Escalation in the Middle East: The war in Iran has caused serious disruptions in the supply of raw materials from the Persian Gulf through the strategically important Strait of Hormuz. This has driven up global energy prices, forcing the Russian Ministry of Finance to compensate its refineries for the massive difference between domestic and international fuel prices.

• Strikes on Russian refineries: Multibillion-dollar state subsidies have become critical to sustaining the viability of Russian fuel producers, who in recent months have faced regular and effective attacks by Ukrainian long-range drones.

Due to massive fuel subsidies, the Russian state budget was unable to fully capitalize on the surge in the price of its oil. Throughout May, the Russian Ministry of Finance calculated oil taxes based on an average price of $94.87 per barrel for the Urals export blend. Although this price was 73% higher than last year’s figures, a significant portion of the Kremlin’s additional revenue went not toward filling the treasury, but toward maintaining damaged oil refining infrastructure.