Democratic Senators Warn Seaports Not to Handle Russian Diesel
Senior Democrats in the House and Senate are warning American banks, ports and energy companies to steer clear of any cargoes of Russian diesel that may be headed towards U.S. shores.
On October 9, the Trump administration announced a deal with Russian President Vladimir Putin to lift sanctions on Russian diesel, a long-shot bid to reduce prices for fuel ahead of midterm elections. The U.S. Treasury says that the cargo import arrangements are legal - but in a letter obtained by Axios and Bloomberg, six senior Democratic lawmakers (and one departing Republican senator) have warned ports that the activity "may be subject to legal action, as well as congressional investigation."
The letter was sent to the ports of Houston, Beaumont, Corpus Christi and New York/New Jersey, as well as six of the largest Wall Street banks. It warns them all to avoid touching any Russian diesel cargoes arriving in the U.S. market or headed to any markets overseas.
The letter cites the Ending Importation of Russian Oil Act of 2022, which banned all Russian energy products from the United States. Waiving the Act would require the consent of Congress and the president's certification that the war in Ukraine is over - circumstances which have not yet occurred. Critics of the diesel deal suggest that the Act has not been waived, and that Russian fuel imports are therefore against the law.
In the letter, the lawmakers requested ports and financiers to confirm that they will preserve records and correspondence related to Russian diesel transactions, anticipating future investigation or litigation.
Signatories included Senators Jeanne Shaheen (D-NH), Chris Coons (D-DE), Elizabeth Warren (D-MA), Ron Wyden (D-OR), Sheldon Whitehouse (D-RI) and Thom Tillis (R-NC), plus Rep. Gregory Meeks (D-NY). The list of sponsors overlaps with a similar bipartisan letter sent to the Trump administration earlier this month. Some of the signatories may soon be well-positioned to initiate public investigations: Rep. Meeks would inherit chairmanship of the House Foreign Affairs Committee if the House transitions to Democratic control, and he would have the power to hold hearings and issue subpoenas.
Similarly, Rep. Jamie Raskin (D-MD) - who is in line to take over the chairmanship of the House Judiciary committee - has warned the American Petroleum Institute, the U.S. Chamber of Commerce and the American Fuel and Petrochemical Manufacturers that the cargoes are unlawful.
"Your members are now on notice that taking part in any effort to help President Putin hawk Russian diesel in the U.S. is a clear and dangerous violation of federal law," Rep. Raskin wrote. "[Importers] may therefore have to face both civil and criminal penalties, including up to 20 years’ imprisonment."
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Reuters has identified one cargo that is likely under way for an American port, but the extent of any further scale-up may be limited. The rationale for importing the physical fuel into the U.S. is unclear: the United States already produces more diesel than it can consume, and exports about 1.6 million barrels each day to foreign buyers. By contrast, Russia has a diesel shortage, and until recently it did not export the fuel at all. Its war-damaged refineries are operating an estimated 40-50 percent below capacity due to Ukrainian drone strikes, leading to shortages and long queues for fuel in some Russian regions.
Nonetheless, tracking data suggests that three tankers are full of Russian diesel fuel and under way for North America, and the Kremlin predicts that the deal's exports will amount to about 3.5 million barrels per month - equivalent to roughly three percent of U.S. consumption.
