Russian President Vladimir Putin has enacted a law stipulating a gradual reduction of oil export tariffs from 30 percent in 2019 to 0 percent by 2024.

The law is part of a set of measures adopted for the oil sector, which include, in particular, an increase in the tax on the extraction of natural resources over a period of three years. This reform is aimed at streamlining oil-related taxation and Russia’s reliance on resource exports.

At the same time, the government reserves the right to impose an additional tariff on the export of petroleum products if the price of fuel in the domestic market increases dramatically.

The government will be able to establish, from 2019, tariffs for petroleum products that correspond to 60% of the tariffs for oil exports, if the price increases by 15%.

The package of measures was approved by the State Duma (Russia’s lower house of parliament) on July 24 and by the Federation Council (the upper house) on July 28.

Russian Deputy Prime Minister Dmitri Kozak said earlier that the initiative would increase state budget revenues by up to 1.6 trillion rubles (over $ 25 billion) in six years.

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This comes as Russia’s finance ministry warned in early July of a further collapse in oil prices if they remain above the long-term equilibrium levels of $50-60 a barrel.

According to the ministry, countries like the United States, Canada, Brazil, Angola and other countries have sufficient resources and opportunities to increase oil production.

“In 2018, oil prices reached new highs not seen since 2014. The main factors behind price growth were the economic crisis and the collapse of oil production in Venezuela, as well as the intentions of the United States towards Iran with the end of the nuclear deal, although stable oil market prices are below current levels of around $50 a barrel, and current growth should be considered temporary […]. If they remain above long-term equilibrium levels, the price collapse will repeat itself again,” the minister’s report said.

Russia is the world’s number one exporter of oil, and is the largest oil supplier of both the European Union and China.