40,000-Tonne Russian Diesel Cargo Faces Opposition From New Jersey Governor
Key Facts
New Jersey Governor Mikie Sherrill said she is weighing options to block a Russian diesel deal from reaching a port in the state, describing it as "corrupt and illegal." The shipment involves a Malta-flagged tanker carrying about 40,000 metric tons of low-sulfur diesel. Tracking data initially showed its destination as New York and New Jersey, with an expected arrival date of November 7, before the listed destination changed to "for orders." The report did not announce an effective ban on the shipment, nor did it say Sherrill was seeking to block Russian diesel shipments from all East Coast ports. She is reviewing her options as a temporary federal waiver allows fuel-related transactions, while the shipment’s execution and commercial destination remain uncertain.
The tanker, named Agioi Fanendes, is one of several cargoes that sailed from Russia as efforts continued to find buyers. Multiple sources said the cargoes had no confirmed buyer when they were loaded, while the report said U.S. administration officials had been encouraging American companies to accept them despite legal and reputational risks. Another report said at least three tankers sailed to the United States in mid-October under an executive order issued by President Donald Trump on October 16, but the fuel’s destination remained unclear. A ship-tracking company also said three tankers had indicated U.S. destinations, with plans potentially changing during the voyage. A destination shown in tracking data alone therefore does not mean the cargo will be unloaded at a U.S. port or that a buyer has committed to take it.
The U.S. Treasury Department, through the Office of Foreign Assets Control, issued General License No. 135 on October 9, authorizing transactions related to the sale, delivery, unloading and importation of Russian diesel. A Treasury official said the license "is consistent with actions the agency has taken before," adding that the department complies with applicable laws and regulations. According to the Associated Press, U.S. sanctions do not apply until April 2027 to Russian diesel cargoes loaded onto tankers by the date of the announcement. On October 27, Senator Richard Blumenthal called on the tanker’s owner, EASTMED, to recall it and urged the company to refrain from future Russian diesel transactions. A letter from U.S. lawmakers also called on banks and port authorities to preserve records of communications and proposed or completed transactions, amid the possibility of oversight and a congressional investigation.
The arrangement’s background dates to Trump’s October 9 announcement of a deal to supply diesel from Russia, which he said would begin with more than 300,000 tons, followed by 500,000 tons in November and 1 million tons after that, then 3 million tons over a short period. Russian Deputy Prime Minister Alexander Novak said the first 40,000-ton shipment was equivalent to about 300,000 barrels, or roughly 7% of U.S. daily consumption of about 4 million barrels. The Associated Press had reported that the first Russian diesel tanker bound for the United States indicated New York as its destination, with an expected arrival on November 7. If it arrives, it would be the first Russian diesel shipment to the United States since July 2023, according to the agency. But the current shipment alone does not establish that the larger volumes Trump announced will materialize or continue flowing into the U.S. market.
The deal’s effect on prices remained under debate. The Associated Press quoted energy policy experts as saying it would not bring prices down much, with the best-case scenario being a slight, localized decline near New York, New Jersey and Philadelphia. An expert at Columbia University’s Center on Global Energy Policy said refined-product prices, including diesel, remained at about half their prewar levels, and that additional Russian supplies could ease price pressures without substantially lowering prices. When the deal was announced on October 9, diesel futures fell on the news, while the U.S. average retail price remained at $6.28 a gallon, after reaching a record $6.52 on September 22. In EL7 data, the front-month heating oil and low-sulfur diesel futures contract settled at $4.8152 a gallon on October 28, compared with $4.925 on October 20. These are futures settlements, not prices at the retail pump, and do not in themselves establish a causal link between the contract’s movement and the dispute over the cargo.
The search for markets for the cargoes comes as Russia seeks to sell off summer-grade diesel before it needs winter and Arctic grades in the following months, according to the Associated Press. Rapidan Group said Moscow and Washington were still looking for buyers, and that it would not be surprised if the cargoes ended up in Brazil. Experts linked higher diesel costs to increased costs of transporting goods, while the agency reported that some companies had begun passing higher costs on to consumers through surcharges on orders and postal shipments. The tanker in question has had its listed destination changed from New York and New Jersey to "for orders," and had no confirmed buyer when it was loaded. Its actual point of arrival remains uncertain, while reports expected other tankers to arrive in the week after the midterm elections, without clarity on which ports would receive the fuel.