Russia Says First Diesel Shipment is Ready as Political Debate Continues
Russian officials are indicating the country is ready to begin its promised exports of diesel fuel, with the first tanker ready to sail as early as Thursday. It comes as the political debate continues over the deal between Vladimir Putin and Donald Trump, while analysts continue to downplay the impact of the Russian supply on the American and global markets.
Russia’s Deputy Prime Minister, Alexander Novak, said the tanker could depart on Thursday, October 22, according to a report from the Russian news agency TASS. Few details were provided other than that it would consist of 40,000 metric tons (the equivalent of 300,000 barrels according to Bloomberg). The report did not specify the name of the vessel or where it had loaded, possibly for security reasons, nor where it would be headed in the United States.
Novak is quoted as saying the contract signing for the deal between the United States and Russia is “nearing completion,” and that Russia could restore its normal volumes of diesel exports by the end of the year. He highlighted that exports would be completed “to the extent of our capabilities,” while also saying Russia could restore natural gas exports if Europe was willing. He talked of the potential of repairing the Nord Stream pipelines while noting that one of the four lines is still operable.
Separate reports are quoting Vladimir Putin also saying the first diesel shipment could happen in two or three days. He also referenced the need to complete the financial agreement. Putin had agreed with Trump to initially supply 300,000 metric tons of diesel, with Trump saying the volume would be increased to 500,000 metric tons in November and reach 1 million tons shortly thereafter. Russia’s Novak has said the goal would be to reach 3.5 million tons of diesel production by the end of 2026, noting Russia could also start supplying diesel to other countries.
Trump continues to insist that the deal is part of his efforts to negotiate a peace deal with Russia. His envoy Steve Witkoff arrived in Russia on Wednesday and thanked Putin for his efforts. Commentators also believe Trump is rushing the deal before the U.S. midterm elections. The U.S. Treasury suspended sanctions authorizing diesel transactions until April 2027, while Trump suspended the Congressional-imposed sanctions and tariffs just days after the legislation had become law.
U.S. officials have said the deal would help to alleviate pressure on the U.S. market for diesel, where the price for road transport is averaging well over $6 per gallon, with many places reporting over $7 per gallon. Putin, in his comments, estimated Russia’s supply could lower global diesel prices by five to six percent.
Russia had previously suspended exports after a series of attacks by Ukraine crippled its refinery capacity. Exports have been cut by 75 percent to just 141,000 barrels per day in September versus more than 600,000 barrels per day, according to data from Kpler. They equated the 300,000 metric tons cited by Trump to roughly 73,000 barrels per day for a month.
The political debate continues in the United States, where members from both parties are calling the deal a violation of U.S. law. Europeans are also calling on the United States to reject the exports to keep the pressure on Russia.
Market analysts have noted that the U.S. exports about 1.5 million barrels of diesel per day. Many are calling the Russian supply a “rounding error” to the market. Ukraine has dismissed the deal, saying in reality it would cover “less than two hours of American diesel consumption.”
The International Energy Agency warned earlier this month that diesel supplies “will likely remain constrained well into 2027.” Adding further pressure, with colder weather arriving across much of the United States, demand will also be going up for heating oil, creating further pressure on the broad market.
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Ukraine has also resumed its attacks, including striking a products terminal in St. Petersburg over the weekend.
While the details of the shipment have not been released, analysts note it could take as much as three weeks to reach the United States. There would be additional time needed for offloading before it could get into the American supply chain.
