OREANDA-NEWS. Export duties on crude oil could rise 3.5-5% to US220-224 per ton (US 30.1-30.7 per barrel), effective 1 August, reported the press-centre of OTKRITIE FC.

View. Even though this tax hike would be marginal, it could negatively impact the netback export price, in August if the price of oil continues to decline. While the netback export price climbed 22% (to US 36/bbl) in early June, it has been 16% lower during the two weeks of July (c US 30 per barrel). We expect that the netback price could fall 28% to US 21.6/bbl. By contrast, if the price of oil sinks below US 55 per barrel, the ‘Kudrin scissors effect’ could push the netback price down to US 18/bbl, although we believe such a scenario to be rather unlikely.

Valuation. The average P/E for the Russian oil majors is equal to 8x. Russian oil stocks trade at a 8% premium on P/E to their EM peers, and at a 60% premium to international oil majors.

Action. We view this news as a short-term negative for stock prices, as well as an additional trigger for a deepening of the correction in the Russian equity market.