“If we get diesel from Russia, basically it means that their existing customers are not going to get it and they’ll have to go somewhere else, and that will keep the price basically where it is now,” Michael Lynch, distinguished fellow at Energy Policy Research Foundation, a nonpartisan research institution focused on energy and economics, told The Associated Press.
Mr. Trump said Friday on Truth Social that Russia will “immediately supply” more than 300,000 tons of diesel, an additional 500,000 tons in November, and 1 million tons “immediately thereafter.”
“Between our TOTAL CONTROL of the Strait of Hormuz, and this great announcement on Russian Energy, Diesel Prices for Americans and, indeed, the World, will be COMING DOWN, IN RECORD NUMBERS, AND FAST!” he wrote.
A White House official said the plan will lower diesel costs for American farmers, truckers and other workers.
“Adding hundreds of thousands of tons of diesel fuel to the global markets will lower prices,” the official told CBS News in an email. “The Treasury Department issued an [Office of Foreign Assets Control] license allowing Russia to immediately begin selling diesel to the United States and the world — which they were previously unable to do.”
Shift in policy
The agreement represents an abrupt shift in policy by the U.S., which, from the start of Russia’s war with Ukraine, had banned imports of Russian oil. President Trump in September signed a bill, named after the late Sen. Lindsey Graham, into law that allows the Trump administration to impose tariffs of up to 100% on the five largest purchasers of Russian oil and natural gas.
The national average for diesel in the U.S. reached a record high of $6.53 per gallon on Sept. 22, according to AAA. As of Monday, it was $6.27 a gallon, up from $3.73 a gallon in late February, just before the U.S. and Israel attacked Iran. Diesel costs are even higher in states such as California, where the average price is $8.38 a gallon.
Higher diesel costs put upward pressure on prices for a range of goods, from food to lumber, because the fuel is widely used across the agriculture, construction and transportation industries.
Tapping Russia for diesel is drawing pushback from lawmakers, with a bipartisan group of six senators on Sunday calling for the Trump administration to “immediately reverse course” on the plan.
“The United States should not provide Putin with a financial lifeline while Russia continues to kill Ukrainian civilians. The Administration must immediately reverse course,” they wrote.
Beyond such geopolitical issues, energy experts and Wall Street analysts point to several reasons in explaining why access to Russian diesel is unlikely to have much impact on U.S. prices.
First, it’s unclear whether Russia can export large volumes of diesel after Ukrainian strikes knocked out much of its refining capacity. Ukraine has targeted more than 3 million barrels per day of Russian refining, according to Tom Kloza, chief energy adviser for Gulf Oil.
“None of the numbers mentioned in the Friday communique make sense,” he said in an email, referring to Mr. Trump’s social media post announcing that Russia had agreed to release more diesel. “One wonders whether Russia could export any diesel in October, November or December.”
Unless Ukraine pauses its strikes on Russian oil infrastructure, Russia will struggle to meet the supply commitments it made to the U.S., Adam Crisafulli, head of investment advisory firm Vital Knowledge, also said in a report.
The amount of diesel Mr. Trump said Russia has agreed to release is also modest relative to the global market.
“The world consumes around 3.5 million to 4 million metric tons of diesel a day (including 500K tons in the U.S.), so this incremental Russian supply isn’t massive,” Crisafulli said.
The U.S. consumes roughly 3 million to 4 million barrels of diesel per day, according to industry figures.
“It might take the edge off of prices”
Debnil Chowdhury, vice president and head of Americas and Europe fuels and refining at S&P Global Energy, agreed that the deal will have little impact on prices, noting that it does not materially affect global inventory levels.
“The export volumes committed by Russia for this month and November are within the range of Russia’s current exports, which implies that Russia can hold its side of the deal without increasing supply to the market,” he told CBS News in an email.
The bottom line is that greater access to Russian diesel doesn’t offset the disruptions to oil supplies stemming from the war with Iran, experts said. The conflict has damaged refining capacity in the Middle East and hampered shipping traffic in the Strait of Hormuz, leading to lower global crude output.
“Refined products like diesel are still barely half of prewar levels,” said Daniel Sternoff, senior fellow at the Columbia Center on Global Energy Policy. “So, even if there were to be some follow-through from the Russians to put a little extra diesel into the world markets, it might take the edge off of prices, but it will not substantially lower them.”
The Trump administration has taken several steps to try to ease fuel prices amid stubbornly high U.S. inflation. Earlier this year, Mr. Trump released oil from the Strategic Petroleum Reserve and waived restrictions on the types of vessels that can legally transport goods between U.S. ports.
Most recently, Mr. Trump last week issued an executive order to expand access to tax-free, red-dyed diesel, a move aimed at lowering prices for truck drivers and farmers.
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