Agreement to supply US with Russian diesel
US President Donald Trump thanked Russia today for the agreement on diesel fuel supplies during an election rally in New York.
Russian news agency Sputnik quoted Trump as saying in Syracuse, “By the way, Russia agreed to send us millions and millions of barrels of oil to us, which is diesel fuel. This is what we really need. So, thank you.” Trump’s supporters applauded his remarks.
Trump had announced earlier yesterday that he had reached an agreement on diesel supplies from Russia during a phone call with Russian President Vladimir Putin.
Kirill Dmitriev, the special envoy of the Russian President for investment and economic cooperation with foreign countries and head of the Russian Direct Investment Fund, said today that the agreement between Moscow and Washington on diesel fuel supplies reflects the strength of economic cooperation between the two countries and its benefits for the peoples of both nations and the world as a whole.
The US President announced yesterday that he had held a phone conversation with President Putin, which he described as “very successful,” during which it was agreed that Russia would immediately pump 300,000 tons of diesel into US and global markets.
Trump wrote on his “Truth Social” platform: “It was agreed that Russia would immediately supply the US and global markets with more than 300,000 tons of diesel fuel, with an additional 500,000 tons in November next, followed by another million tons immediately thereafter. Furthermore, based on the capacity of its diesel refineries, Russia will supply 3 million tons of diesel fuel within a short period.”
In this context, the Kremlin quoted Russian President Vladimir Putin as saying that his country is ready to supply oil and petroleum products to the United States and global markets, noting that this would support the global economy as a whole.
For its part, Germany said it would maintain sanctions imposed on Russia due to its war in Ukraine, following US President Donald Trump’s announcement that his administration had temporarily lifted sanctions on Russian fuel.
Government spokesperson Steffen Kornelius stated in a press release, “The federal government has taken note of the US decision regarding the supply of Russian diesel.”
He added that Germany’s position remains clear, stating, “The federal government remains committed to sanctions decisions against Russia and is working with its European partners to impose additional sanctions.”
Diesel prices, used in agriculture, home heating, and truck freight transport, are approaching unprecedented levels, threatening the Republican Party’s prospects in the congressional elections scheduled for November 3, which will determine whether Trump retains his narrow majority in Congress.
Four informed trade sources indicated that China is scheduled to resume its refined fuel exports in October, after a brief pause during the Golden Week holiday, a move expected to help alleviate supply shortages in global fuel markets.
According to two separate industry sources, China agreed to export a total of approximately 3.7 million tons of diesel, gasoline, and jet fuel during the current month.
China had previously imposed restrictions on fuel exports last March to protect domestic supplies amid disruptions to crude oil flows and refining operations resulting from the war in Iran, but it eased those restrictions between July and September.
Although Beijing typically regulates fuel exports through a quota system, it has recently tightened controls by limiting shipments on a monthly basis.
The price of a barrel of Kuwaiti crude oil fell by $2.42 to reach $105.68 per barrel in yesterday’s trading, compared to $108.10 in last Thursday’s trading, according to the price announced by the Kuwait Petroleum Corporation.
In global markets, oil prices rose at settlement yesterday as Hurricane Isaac moved toward the northern Gulf of Mexico, prompting oil companies to halt more than 70 percent of crude oil production in U.S. waters.
Prices had earlier declined during the session after President Trump stated that talks aimed at ending the war in the Middle East with Iran were “productive.” He also hinted at an upcoming announcement, details of which were not disclosed, regarding diesel fuel, and said he was considering suspending the federal tax on gasoline.
Reuters reported yesterday that China, the world’s largest oil importer, plans to resume refined fuel exports after a brief pause during the “Golden Week” holiday, a development that affects the market.
Prices experienced volatility this week amid growing threats targeting oil shipments in the Gulf and the Strait of Hormuz, through which cargo representing approximately 20 percent of global oil and fuel supplies passed before the outbreak of the war.
The United States continues to exert economic pressure on Iran in an effort to end the conflict. Last Thursday, Washington imposed new sanctions targeting individuals, networks, and 17 vessels involved in transporting Iranian crude oil and petroleum and petrochemical products.
The war in the Middle East and the conflict between Russia and Ukraine have disrupted supplies of refined fuels, particularly gasoline, jet fuel, and diesel.
The oil market is also facing repercussions from Hurricane Isaac in the Gulf of Mexico. The hurricane halted production of approximately 1.3 million barrels per day, equivalent to 62.9 percent of current oil production as of last Thursday, according to data from the U.S. Bureau of Ocean Energy Management.
