Russian Diesel Deal for More Than 300,000 Tons Faces Uncertainty Over Implementation
Key Facts
Russian Deputy Foreign Minister Alexander Pankin said on November 9 that the Russian diesel deal with the United States could allow trade ties between the two countries to be gradually rebuilt, while how the deal will be implemented remains unclear. The tankers had raised questions about whether the shipments would arrive after two changed course the previous week, according to a Reuters report published the same day. U.S. President Donald Trump had announced on October 9 an agreement with Russian President Vladimir Putin to make more than 300,000 metric tons of diesel available to U.S. and global markets immediately, with larger shipments later. But an Associated Press report on November 5 said the deal had not resulted in any confirmed delivery to the United States as of that date. Pankin said the deal could "be a basis for the gradual restoration of trade and other ties between our countries."
According to the Associated Press, two tankers bound for the U.S. East Coast had changed course by November 5; one headed toward Brazil, while the other entered the Mediterranean Sea. A third tanker in the North Atlantic was still heading toward the United States, but had changed its destination from New York to "orders of the shipper," without naming a discharge port. Matt Smith, an analyst at Kpler, said it was unclear whether there were U.S. buyers for the shipments and that the third tanker could also change course. Smith said regulatory and sanctions concerns could prevent the cargo from being discharged on the U.S. Atlantic coast. He added that traders were reluctant to unload the shipments because of the consequences.
The point of contention is how the executive waiver aligns with existing sanctions on Russian imports. The U.S. Treasury Department says the Office of Foreign Assets Control issued a waiver covering the sale, delivery, discharge and import of Russian diesel through April 7, describing it as "consistent with all applicable laws." But the executive order issued on March 8, 2022, prohibits the import into the United States of Russian crude oil, petroleum products, petroleum fuels, liquefied natural gas and coal, according to OFAC. The Associated Press reported that New Jersey Governor Mikie Sherrill asked port and terminal operators in the state to reject the vessels. The agency said the administration maintains that the waiver is legal, and that no court had ruled on the dispute as of its November 5 report.
The White House and the Kremlin have not disclosed whether the deal is in writing, the diesel price and payment terms, or the companies involved, according to the Associated Press. Kremlin spokesman Dmitry Peskov also said he did not have details of the commercial shipments, but expected that "all the diesel will find buyers." The deal was struck as Trump sought to ease diesel prices before the November 3 midterm elections, which the Republican Party lost, according to Reuters. The Associated Press said analysts believed the imports would not lower U.S. prices by much, after they reached record levels during the U.S. war with Iran. Data from the Energy Information Administration showed the average U.S. retail diesel price fell to $6.292 per gallon in the week of November 2, from $6.352 in the week of October 26.
In the futures market, the New York Harbor ultra-low-sulfur diesel contract settled at $4.1938 per gallon on November 9, compared with $4.4216 on November 2, according to EL7 data. That move alone does not establish an impact from the deal, which had not produced a confirmed delivery to the United States in the Associated Press update published on November 5. Buyer details, the deal's terms and the third tanker's route remain among the unresolved points in published information. Pankin said Moscow sees the deal as an opportunity to gradually restore trade and other ties. The Reuters report did not specify a timeline for that step or further operational details on implementation.