Russia's energy producers, already battered by Western sanctions, may become further impeded from long-term growth as the Kremlin tries to squeeze more tax revenue from the sector.
Instead of basing the tax rate on the price of Urals, which is a grade of Russian crude that commands lower prices, levies are now based on the Brent crude international benchmark, minus a fixed discount. This would allow Russia to gain around $8 billion in revenue, making up for losses caused by Western sanctions that have helped keep Russian crude prices low. Nearly half of Russia's budget depends on oil and gas revenue, which fell by 45% in the first quarter.
The G7 views the tax change as an acknowledgement from the Kremlin that it will have to continue selling its oil at a discount for some time.