Analysts Doubt Russian Diesel Can Ease Fuel Prices Before US Midterms

Russia may struggle to supply the diesel promised under its agreement with U.S. President Donald Trump, analysts warn, while even successful deliveries could offer little relief from fuel prices ahead of November’s congressional elections.

The doubts center on the availability of Russian fuel and the scale of the shipments compared with daily consumption and supplies disrupted by the wars in Ukraine and the Middle East.

Trump has outlined an immediate release of 300,000 metric tons, followed by 500,000 tons in November and a further 1 million tons.

Another 3 million tons would depend on the condition of Russian refineries.

Questions Over Russian Supply

Neil Atkinson, former head of the International Energy Agency’s Oil Division, questioned how Moscow could fulfill the commitment without diverting fuel needed at home.

“Where the volumes to supply the Trump deal come from is a mystery, unless it comes from domestic supply, which will cripple the Russian economy,” he told CNBC in a note.

The U.S. Treasury has granted temporary sanctions relief for Russian diesel to enable Trump's agreement announced Friday.

That removes a trade restriction but leaves questions about delivery.

Lombard Odier analysts said the Russian agreement and China’s plans to restart refined-fuel exports could help address shortages affecting transport, agriculture and industrial production.

However, they warned that “announced shipments are not equivalent to delivered supply.”

They added that neither arrangement immediately repairs damaged infrastructure or returns maritime transport to normal.

Small Volumes Against a Global Shortfall

Atkinson estimated that spreading the first 300,000 tons over a month would provide about 70,000 barrels a day.

U.S. diesel consumption is 3.7 million barrels daily, compared with 29 million worldwide.

The U.S. also holds 105 million barrels in commercial diesel inventories.

Before the Middle East war, Gulf exporters supplied nearly 1 million barrels a day, much of which remains unavailable because of refinery damage and shipping difficulties, he said.

Atkinson pointed to the G7’s authorization of a separate 50-million-barrel release of oil products, mainly diesel.

He said it had barely eased market tightness because the timing, destinations and actual volumes remained unclear.

Mohit Kumar, chief European economist at Jefferies, similarly questioned the agreement’s likely effect.

“While more supply of diesel would ... ease some pressure on diesel prices, the volumes agreed are unlikely to make a substantial difference.”

Pressure Before the Midterms

Trump’s effort comes after average diesel prices reached a record $6.5276 a gallon in late September, according to AAA.

Pew Research Center polling found that 84% of registered voters considered the economy very important to their vote.

Republicans face the risk of losing both chambers of Congress in November.

Kumar said the administration was pursuing every available route to lower diesel prices, despite opposition in the U.S. and Europe to bypassing Russian sanctions.

Trump’s subsequent declaration of an energy ceasefire between Russia and Ukraine on Sunday surprised policymakers, including those in Kyiv. Russia struck a power plant shortly afterward.

Oil prices initially fell on Monday before rising again.

Quantum Strategy analysts in Singapore forecast that the agreement would fail economically.

They also warned that Putin could interpret it as encouragement to intensify gray-zone operations in Europe, adding pressure on European currencies and government debt.