President Trump Has Struck A Deal With Putin For Russian Diesel To Ease Prices, But The Unintended Consequences Could Be Devastating
Trump just brokered a diesel deal with Putin that he says will ease pain at the pump, but Republican lawmakers are already calling it catastrophic and moving to kill it before a single drop arrives on American shores.
After a call with Vladimir Putin, President Donald J. Trump said Friday that Russia would supply diesel to the US and global markets: 300,000 tons immediately, 500,000 tons in November and 1 million tons immediately thereafter, Al Jazeera reported. “Lower prices for Americans, especially our Great Farmers, Ranchers, and Truckers, is my Greatest Priority,” Trump said, according to Fortune.
Fortune and PBS NewsHour report that he also cited 3 million tons within a short period. Al Jazeera’s first report did not include that figure. Because the sources conflict, we cannot confirm a single total.
The election is on Nov. 3. Pew Research Center polling found that the economy is the top issue for 84% of registered voters.
Key Details Washington Left Unsaid
Deputy Prime Minister Alexander Novak told Tass that Russia is “immediately starting to lift restrictions on diesel exports ahead of schedule,” and that supplies to the US could begin in October. The White House did not say who pays, when the diesel arrives or whether the November shipments land before Election Day.
Analysts See Little Price Relief
An estimate from the US Energy Information Administration, via CNN, says 800,000 tons (about 6 million barrels) would cover roughly a day and a half of US diesel demand.
Dan Pickering of Pickering Energy Partners estimates the deal adds 5% to 6% to supply by year end and calls it “helpful but not a needle mover for global diesel markets.” Michael Lynch of the Energy Policy Research Foundation said “it’s kind of shuffling deck chairs on the Titanic.” Columbia’s Daniel Sternoff said the deal “might take the edge off of prices.” Ed Hirs of the University of Houston expects the impact on US prices to be “minimal.”
Neil Atkinson, a former head of oil markets at the International Energy Agency, said “it’s very hard to see how Russia can deliver the volumes” discussed in the deal. Russia banned diesel exports in July after Ukrainian attacks on its refineries, and the International Energy Agency says Russian diesel output has fallen about 30%. Windward, citing Vortexa, says Russian diesel and gasoil exports fell to 190,000 barrels a day in the third quarter, down from 690,000 in the second and 850,000 in the first.
Sanctions Law Meets a Long License
Trump signed a Russia and Iran sanctions act last month. It targets officials, banks and shadow-fleet tankers, and PBS NewsHour reports that it places tariffs of up to 100% on the top five importers of Russian oil or gas. PBS NewsHour also reports that US sanctions won’t apply until April 2027 to Russian diesel loaded as of Friday, the first diesel license longer than the standard 30 days since the war began. Richard Nephew, a former State Department sanctions official, called the damage to the sanctions regime “very significant.”
Republicans Warn of “Catastrophic” Consequences, Move to Force a Vote
Rep. Michael McCaul of Texas said lifting sanctions on Russian oil would “fund the Kremlin’s war machine.”
Senator Lisa Murkowski of Alaska said Trump, “should be using those authorities instead of allowing Russia to export diesel, rake in revenues, and continue its catastrophic war in Ukraine.”
Rep. Brian Fitzpatrick of Pennsylvania said Saturday that he will introduce the Ronald Reagan Peace Through Strength Act: “It will be forced to the Floor via discharge and it will pass overwhelmingly.” Rep. Don Bacon told Axios he has “already agreed” to sign the petition.
Axios notes that a discharge petition needs 218 signatures. Axios also reports that the House isn’t scheduled to vote until after the Nov. 3 midterm, and any bill would still need the Senate and could face a veto.
Kyiv Calls It a Gift to Putin
Volodymyr Zelensky called the deal “not fair and not honest,” telling Axios it came to a gift to Putin. Axios reports that on Saturday, Trump called for Ukraine to replace Zelensky with a leader willing to reach a deal with Russia.
Diesel Futures and Refiner Shares Slip
CNN reported that diesel futures fell about 4% at Friday’s close. In that session, Benzinga reported, Marathon Petroleum (NYSE:MPC | MPC Price Prediction) fell about 2%, Valero Energy (NYSE:VLO) fell about 1.9% and PBF Energy (NYSE:PBF) fell 4.6%. None of the sources we reviewed gives a cause for those moves, and we are not linking them to the announcement.
For now, no diesel has arrived, the analysts quoted doubt it will move prices much, and a Republican lawmaker is trying to force a House vote against the deal.
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AJ spent 10 years writing about financial markets at The Motley Fool. His coverage centers on technology stocks and the broader macroeconomic trends, from interest rates to geopolitics, that shape where markets are headed next. AJ is drawn to the stories where big-picture economics and individual companies collide.
