Russia reinstated its fuel damper zeroing mechanism on May 1. With the moratorium now over, the government is shifting focus from budget support for oil companies to alternative methods of stabilizing the domestic fuel market.
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Starting May 1, 2026, the moratorium on zeroing out the fuel damper in Russia has ceased to be in effect, which was introduced in autumn 2025 amid a sharp rise in exchange prices for fuel. Now, when domestic wholesale prices exceed established thresholds by more than 20% for gasoline and 30% for diesel, budget payments to oil companies are zeroed out. The government explains the refusal to extend the moratorium by the stabilization of the market situation and the improvement of the financial position of oil companies.
Russia's moratorium on zeroing out the fuel damper expired on May 1—a decision confirmed by Deputy Prime Minister Alexander Novak. This means the damper calculation once again takes into account deviations of domestic wholesale prices from established thresholds.
The zeroing moratorium was introduced by presidential decree in fall 2025 for the period from October 1 through May 1, 2026, against the backdrop of a sharp rise in exchange-traded fuel prices. Despite activediscussion in March about extending it through year-end, the government decided to abandon this fuel market price stabilization tool.
How the damper works
The fuel damper is a budget mechanism that smooths the gap between export and domestic prices for gasoline and diesel:
if the export netback (the selling price on foreign markets minus all logistics costs, duties, insurance, etc.) is higher than the "domestic" price, the state compensates oil companies for deliveries to the Russian market;
if the export price, conversely, falls below the domestic price, companies transfer money to the budget.
Thanks to this mechanism, domestic fuel prices rise and fall more slowly than global quotes, and the scheme itself can function either as an industry subsidy or as an additional levy—depending on market conditions. Between 2019 and 2025, damper payment volumes ranged from 280 billion rubles (in 2019) to over 2 trillion rubles (in 2022), while in 2020, amid low oil prices, companies instead paid about 350 billion rubles into the budget through the reverse damper.
This instrument was introduced on January 1, 2019, as a response to the sharp spike in gasoline and diesel prices in 2018. Back then, against the backdrop of volatile oil quotes and ruble weakness, retail prices at filling stations rose noticeably (according to Rosstat, gasoline costs increased 9.4% over 2018 against overall inflation of 4.3%), and the government had to negotiate a temporary price freeze with oil companies. To move away from manual management and cushion the impact of global prices on the domestic market, the damper formula was built into the Tax Code.
Zeroing as a built-in safety valve
The damper mechanism has a built-in limiter: if the domestic wholesale fuel price deviates too far upward from the established indicative level, budget payments to oil companies under the damper for that month are zeroed out.
Under current Tax Code regulations, this occurs if exchange prices for AI-92 gasoline exceed the benchmark by more than 20% on average over the month, and for diesel fuel by 30%. In 2026, benchmark prices are set at 62,300 rubles per ton for AI-92 gasoline and 58,950 rubles per ton for diesel.
In other words, at stable price levels the damper is meant to support the domestic market when the export alternative becomes too attractive, but when domestic prices rise excessively, the state activates this safety valve and stops compensating companies for supplies to the Russian market.
Since this mechanism was introduced, the damper has been zeroed out twice. First during the height of the 2023 fuel crisis, caused by high oil prices, ruble depreciation, as well as refinery maintenance and high utilization of Russian Railways. Then in August 2025, when against the backdrop of scheduled and unscheduled refinery maintenance, the market again approached dangerous levels: AI-95 gasoline on the St. Petersburg International Commodity and Raw Materials Exchange rose above 80,000 rubles per ton for the first time, and by month's end gasoline producers raised wholesale prices by 11.7%, according to Rosstat data.
Why the moratorium was needed
In autumn 2025, the Russian fuel market found itself in a difficult situation: rising exchange prices had already led to the loss of budget support for oil companies, which were already operating under increased pressure on the industry.
This created a double risk: on one hand, prices were already rising in the domestic market, and on the other, the companies themselves lost the mechanism that had been designed to compensate for losses from fuel supplies within the country.
Oil companies then requested a moratorium on zeroing out the fuel damper, and for more than six months—from October 1, 2025 through May 1, 2026—deviations of exchange prices from the benchmark level did not affect the damper mechanism.
This measure had mixed consequences. On one hand, the moratorium preserved budget payments to oil companies and thereby supported refining economics during a period of high wholesale prices. On the other hand, it intensified a contradiction within the system: companies continued receiving compensation even with notable growth in exchange quotations, making the mechanism more costly for the budget and raising questions about whether this reduced incentives to restrain wholesale prices. This is precisely why the government now explains its refusal to extend the moratorium by pointing to a more stable market situation and improved financial position of oil companies.
What the export ban has to do with it
It's worth noting that the damper mechanism operates not in a vacuum, but simultaneously with restrictions on fuel exports: a temporary ban on exports of gasoline and certain petroleum products, including for producers, remains in effect until July 31, 2026.
This is a forced measure, necessitated by the need to stabilize the domestic market during a period of seasonally high demand and prevent a new fuel shortage against the backdrop of rising global oil prices and strikes on oil and gas infrastructure. For the agricultural sector, stable fuel prices during spring and summer months remain a necessary condition for normal planting and harvesting campaigns.
However, despite restrictions on physical fuel exports, the damper continues to be oriented toward calculating export netback—that is, toward external price conditions, which currently remain extremely unstable. And herein lies one of the paradoxes of the current system: physically, exports may be restricted, but the formula still proceeds from how profitable they would be.
Implications for the domestic market
The Russian fuel market is now subject to several layers of regulation simultaneously. The first is the damper mechanism itself, which redistributes funds between the budget and oil companies depending on the gap between foreign and domestic prices. The second consists of export restrictions that keep more fuel inside the country. The third involves direct agreements with major oil companies: the owners of the 12 largest refineries will sign documents with the government regulating supply volumes and retail price growth for gasoline and diesel in 2026, taking expected inflation into account.
Under these conditions, the decision not to extend the moratorium is primarily a signal of temporary reduction in budgetary support for the industry through strengthened administrative market management. It turns out that the fuel damper mechanism, which was designed to reduce the share of manual intervention during critical periods, still requires fine-tuning when the market enters a phase of sharp volatility.
As long as the export ban remains in effect, the risk of physical fuel shortages appears limited, while agreements with refineries should additionally keep retail price growth within inflation bounds. But over the longer term, this structure makes the market more dependent on government decisions: the more manual restrictions and exceptions built into the system, the weaker the principle of formula-based smoothing becomes—the very reason the damper was introduced in the first place.
