Trump's deal with Putin on diesel is unlikely to lower global prices

U.S. President Donald Trump’s agreement with Russia on diesel fuel supplies is unlikely to lead to a significant drop in prices on global markets. Analysts note that the promised supply volumes are too small to overcome the global fuel shortage.

Against the backdrop of the U.S. and Israel’s war against Iran, diesel prices have reached record highs. This poses political risks for Trump and his Republican Party, which are campaigning to retain a slim majority in Congress in the midterm elections scheduled for November 3.

Meanwhile, the volumes promised by Moscow are too small to have an impact on the market. Analysts also generally doubt that Russia will be able to supply the promised 300,000 metric tons of fuel to the global market in October, 500,000 metric tons in November, and an additional one million metric tons thereafter.

The first shipment amounts to approximately 73,000 barrels per day. However, according to calculations by the analytical firm Kpler, at least 400,000 additional barrels per day are needed to lower prices. Meanwhile, analysts at Baringa cite an even higher figure—850,000 barrels.

Currently, Russia produces about 1.4 million barrels of diesel fuel per day, of which 1.2 million are needed for the domestic market. Ukrainian strikes on Russian refineries are significantly hindering efforts to ramp up production. According to some estimates, up to 45% of the country’s refining capacity has already been damaged.

Putin claims that following the announcement of the agreement, the price of diesel fuel fell by 5–6%. However, data from the ICE exchange does not confirm this: on October 12, a metric ton of diesel fuel cost about $1,408, while on October 20, it was already $1,449.50.

Critics of Trump’s decision have argued that lifting sanctions on Russian diesel fuel could instead help Moscow finance further attacks on Ukraine, undermining years of efforts to limit Russia’s energy revenues. Meanwhile, consumers will not see any significant relief from high prices.

Source: Reuters.

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