Trump Announces Deal for Russia to Supply Millions of Tons of Diesel
President Donald Trump has announced an agreement with Russian President Vladimir Putin under which Russia would supply millions of tons of diesel to the US and global markets, as a worldwide fuel shortage pushes prices to record levels.
According to Trump, Russia will immediately supply more than 300,000 tons of diesel, followed by 500,000 tons in November and a further 1,000,000 tons shortly after. He said Russia would then deliver another 3,000,000 tons "within a short period of time," adding that the timing depends on "the condition of their Diesel Refineries." The US Treasury's Office of Foreign Assets Control has issued a temporary general license to allow the sales to go ahead despite existing sanctions on Russian energy.
The announcement comes as diesel supply tightens on several fronts at once. Restricted shipping through the Strait of Hormuz, following the conflict with Iran, has cut flows from the Middle East, the world's largest diesel exporting region. At the same time, Ukrainian strikes on Russian refineries have damaged the capacity of Russia, the world's second-largest diesel exporter, prompting Moscow to ban diesel exports. The International Energy Agency has identified the two disruptions as compounding one another in its latest oil market report.
The effects are being felt well beyond the oil market. US diesel prices have climbed to around $6.23 a gallon, according to AAA, and UK diesel has passed £2 a litre for the first time, according to the RAC. Because diesel moves freight, farm machinery and construction equipment, higher prices feed through to food and goods costs more widely, and the issue has become a political pressure point for the White House ahead of November's midterm elections. G7 leaders have already agreed to release up to 100 million barrels of emergency reserves within four months in an effort to ease the squeeze.
The terms so far rest on Trump's own announcement, and it is not yet clear how quickly Russia can deliver while its refining capacity remains damaged. For context, the full 4.8 million tons Trump described equates to roughly 36 million barrels of diesel, a little over a third of the reserve release the G7 has agreed.