Daniel Wolfram
Trump is blaming high diesel prices on the wrong war.
Donald Trump announced a surprise diesel deal with Russia last week.
Russia has promised Trump to ship 300,000 tonnes of diesel immediately, followed by 500,000 in November and a million tonnes in December. According to CNBC, that would equal less than two weeks’ worth of diesel in the whole United States.
The White House also floated a future target of three million tonnes once refineries recover.
Zelenskyy furious
Drivers should not expect cheaper fuel anytime soon. The initial Russian shipments account for less than four per cent of global demand, barely putting a dent in the worldwide shortage caused by ongoing refinery outages caused by the two wars.
According to the Financial Times, International Energy Agency director Fatih Birol urged member states to release more diesel from strategic reserves instead.
The deal was met with fury in Ukraine. President Volodymyr Zelenskyy blasted the deal as a “weak decision” that would embolden Vladimir Putin.
The Ukrainian president feels that Trump is using the Russia–Ukraine war as a scapegoat for his own war with Iran, which has seen US diesel prices soar.
According to the FT, the price at the pump when Trump decided to bomb Iran was at the same level as when Russia first invaded Ukraine in 2022. Since then, prices have skyrocketed to nearly $7 per gallon — nearly three dollars more than when the Iran war started.
Prices are soaring
Russia faces genuine trouble at home, but diesel is not the issue. Passenger cars there run on gasoline, which has run critically low. However, diesel in Russia maintains a surplus, as it is only used by trucks and farm machinery.
Local refineries still churn out 5.8 million tonnes of diesel monthly, leaving up to two million tonnes for export, noted Sergey Vakulenko of the Carnegie Russia Eurasia Center.
“If strikes continue at the current pace, exporting such volumes without hurting the domestic market would become impossible,” warned Seala AI crude analyst Vladimir Nikitin.
This deal will also not help Russia’s war chest in any capacity as it will only generate around $100 million. As Eurasia Group’s Alexander Kolyandr put it, “Ukraine’s irritation is entirely understandable. But this will not provide a significant financial boost to Russia’s war effort.”
