License 135 Allows Russian Diesel Transactions Through April 2027 Amid U.S. Objections

Key Facts

U.S. President Donald Trump said on Thursday, November 5, that the 2022 law banning imports of Russian diesel "may be a bad law; I'll look into it," in response to a reporter's question about the law. Trump did not announce a change to it, leaving his remarks as a questioning of the law rather than a decision to repeal or amend it. The debate comes as a general license issued by the Treasury Department permits some transactions involving Russian diesel, intersecting with a ban enacted by Congress. According to the Treasury's Office of Foreign Assets Control, License 135 authorizes transactions for the sale, delivery, unloading and import of Russian diesel, including its import into the United States. The authorization remains in effect until 12:01 a.m. Eastern Daylight Time on April 7, 2027.

But the license does not lift all Russia-related financial restrictions, nor does it grant general authorization to use designated accounts at U.S. financial institutions. Treasury said it does not permit any funds to be debited from accounts of the Central Bank of Russia, the National Wealth Fund or Russia's Ministry of Finance. The license thus defines the scope of permitted transactions while maintaining explicit restrictions on dealing with the funds of those entities. The administration said the exemption is consistent with previous measures and complies with applicable laws. No court has ruled on the dispute over the authorization's legality, according to the Associated Press.

Tanker movements show that the arrangement has not yet resulted in a confirmed delivery of diesel to the United States. Two sanctioned tankers that had declared destinations on the U.S. East Coast changed course; one headed toward Brazil, while the other entered the Mediterranean, according to the Associated Press. A third tanker remained in the North Atlantic bound for the United States after changing its declared destination from New York to "orders." The agency did not identify a fixed discharge point for the tanker, leaving the arrival of its cargo at a U.S. port uncertain. The Associated Press said the arrangement had not resulted in a confirmed U.S. delivery and that analysts viewed the imports as unlikely to lower U.S. diesel prices by much.

The background to the arrangement dates to October 9, when Trump announced an agreement with Russian President Vladimir Putin to make more than 300,000 metric tons of Russian diesel available immediately, with larger shipments to follow. On that date, U.S. diesel futures fell about 5% after the announcement and were trading at $4.64 per gallon, according to Reuters. In the November 5 session, front-month ultra-low-sulfur diesel futures at the New York Harbor settled at $4.3519 per gallon, compared with $4.2055 on November 4, according to EL7 data. These prices show market movements on the two dates, while the available data did not directly link the November 5 settlement change to Trump's remarks. The Malta-flagged tanker Agioi Fanendes loaded 40,000 metric tons of ultra-low-sulfur diesel at Russia's Primorsk port on October 22.

Neither the Trump administration nor the Kremlin has disclosed whether the agreement was put in writing, or the price of the shipments, their payment terms or the companies involved, according to the Associated Press. The manager of the tanker that loaded the Primorsk cargo also said that the discharge port or country had not been identified or decided, and that New York was not a planned destination. A Reuters report quoted Kremlin spokesman Dmitry Peskov as saying the first tanker had sailed toward buyers and that further shipments would continue at a regular pace, without specifying whether that vessel was bound for the United States. Politically, a group of senators from both parties urged Trump to reverse the arrangement. Lawmakers warned banks, port authorities and fuel distributors that facilitating imports could expose companies to liability and congressional investigations.

Local objections also emerged: New Jersey Governor Mikie Sherrill advised port and terminal operators in the state to reject vessels carrying Russian fuel. In a letter dated November 2, she warned that "any attempt to profit from the illegal trade in Russian fuel will be met with severe penalties." This means implementation of the federal authorization faces political and legal scrutiny alongside the financial restrictions set out by Treasury. The arrival of the tanker still in the North Atlantic and the identification of its discharge destination remain practical open questions in the developments. Washington and Moscow have yet to disclose whether the agreement was put in writing, its price, its payment terms or the parties involved.