President Donald Trump announced a deal to import Russian diesel into the United States, responding to pressures to reduce fuel prices. Trump stated that Russian President Vladimir Putin agreed to release 300,000 tonnes of diesel immediately to the American and global marketplace, followed by 500,000 tonnes in November and an additional million thereafter.
This announcement, made on Friday, drew criticism from Ukraine's President Volodymyr Zelensky, who described it as a gift to Putin and an investment in a war that should be ended. Reports indicate that the US Treasury is suspending sanctions on Russian diesel exports until April 7, but other assets, such as those in American banks, remain frozen.
In a post on Truth Social, Trump mentioned that a further three million tonnes of Russian diesel would be delivered depending on the condition of Russian refineries, which have faced attacks from Ukraine. Putin later indicated that Russia, which had previously banned diesel exports, is willing to supply both the US and global markets with oil and petroleum products, although he did not specify the amounts.
Analysts have expressed skepticism about Russia's ability to meet the announced quantities and the potential impact on American fuel prices. Tim Armitage, an investment strategist at Quilter Cheviot, noted that the initial tranche of diesel equates to approximately 2.25 million barrels, while daily US consumption is around 3.8 million barrels, suggesting that it would not significantly affect pump prices.
The BBC has sought clarification from the White House regarding what the US will provide in exchange for the diesel commitment. A spokesperson for the UK government reiterated its stance of supporting Ukraine and maintaining pressure on Russia through sanctions.
Trump's announcement is part of his ongoing efforts to lower fuel prices in the US amid rising costs due to the ongoing conflict in Iran, which has affected global energy prices. The average diesel price in the US currently stands at $6.28 per gallon, down from a record high of $6.53 at the end of September.
Following Trump's announcement, the US Treasury issued a temporary license allowing Russian diesel into the market. Putin confirmed discussions with Trump regarding the global energy situation and reiterated Russia's willingness to supply oil and petroleum products.
Zelensky criticized the deal, stating that gifts to Putin would not contribute to peace and that Russia would respond with further aggression. He emphasized the need for strong support from the US for Ukraine's defense.
The UK government affirmed its commitment to supporting Ukraine and maintaining pressure on Russia through sanctions. Russia has faced significant fuel shortages this year due to Ukrainian drone strikes on its oil refineries, with diesel production reportedly falling by nearly 30%.
Trump has expressed frustration over these attacks, attributing them to rising fuel prices. However, Zelensky defended the strikes as a necessary response to Russia's long-standing campaign against Ukraine's energy infrastructure.
The announced deal marks a significant shift, as the US Congress recently enacted legislation to impose new sanctions on nations importing Russian oil and gas. This agreement may expose Trump to criticism from European allies and pro-Ukraine politicians in the US, who argue that it could inadvertently support Moscow's military efforts. The future impact of this deal on fuel prices remains uncertain, with the global benchmark for crude oil, Brent, currently above $103 a barrel, compared to approximately $73 before the conflict in Iran began.
As the midterm elections approach, Trump is exploring various strategies to alleviate political pressure, including the possibility of suspending the federal gasoline tax and allowing certain types of diesel to be used on highways without federal tax. He has also influenced G7 nations to release 100 million barrels of oil and diesel from stockpiles to address supply concerns.