Russia is likely to ship more fuel to Asian nations in the coming months as Europe tightens sanctions to step up its response to the invasion of Ukraine.

The country is also considering to raise taxes on the oil and gas sector to the tune of three trillion roubles ($50 billion) in 2023-2025 in order to plug the budget gap, The Kommersant Daily said on Tuesday, citing sources familiar with the discussions. The finance ministry declined to comment.

The two regions (Asia and the Middle East) have already been taking a greater share of Russian exports since the war broke out, according to data from S&P Global Commodities at Sea, highlighting the as-yet-unfinished reconfiguration of global energy flows.

The European Union is set to bar most imports of Russian crude from December 5, followed by a prohibition on oil products that’ll kick in from February, ramping up the pressure on Moscow to redirect more of its energy output.

India and China took a combined 2.7 million barrels a day of Russian crude and products last month, according to Morgan Stanley. That’s 54 per cent higher than a year ago. Smaller nations, dubbed the rest of the world, boosted imports to 926,000 barrels a day from 561,000, the bank said in a recent note.

While buyers in some nations such as Myanmar or Sri Lanka have acknowledged taking Russian cargoes as the war drags on, others have been more circumspect.

As the trade continues to evolve, Russian sellers have been employing a variety of tactics to develop existing markets as well as find new outlets, including re-exports and ship-to-ship transfers.

An uptick in flows may spur competition, hurting prices and undermining refining margins.

The finance ministry expects a budget deficit of 1.2 per cent of GDP this year and 1.1 per cent of GDP in 2023 amid spending for what Moscow calls a ‘special military operation’ in Ukraine and sweeping Western sanctions. chartThe ministry has also proposed hiking the oil export duty and increasing state revenue from the oil products trade. The newspaper said the finance ministry seeks to raise some 1.4 trillion roubles in 2023 alone by hiking export duties and mineral extraction tax on commodities.

The measures, which also include a possible rise in the oil exports duty in 2023 by 50 per cent , will be considered at a government meeting later.

Source: Business Standard