Donald Trump presented his agreement with Vladimir Putin on the return of Russian diesel to international markets as a move that could quickly drive down fuel prices. Energy market analysts, however, appear far less enthusiastic. They question both the scale of the intervention and Russia’s ability to deliver the quantities announced by the U.S. president.
CNN paints a picture quite different from the one the White House has tried to present: even if Putin keeps his promises, the additional supply of diesel may prove too small to bring about a substantial and lasting decline in prices.
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And while in Washington the agreement is being touted as a response to rising energy costs ahead of the midterm elections, in Kyiv it is viewed as a decision that provides Russia with an economic advantage as it continues the war in Ukraine.
Six million barrels: An impressive number, limited impact
According to Trump’s announcement, Putin agreed to immediately release more than 300,000 metric tons of diesel onto international markets, with another 500,000 metric tons expected to follow in November. The U.S. president also mentioned additional quantities to come, depending on the situation at Russian refineries.
The first two shipments total approximately six million barrels of diesel. The number sounds large, but according to data from the U.S. Energy Information Administration cited by CNN, it covers just one and a half days of consumption in the United States.
This is the main objection raised by experts: while these quantities may offer some relief, they are unlikely to shift the balance of a global market that is already under pressure on their own.
Dan Pickering, founder and chief investment officer of Pickering Energy Partners, estimated that the announcement could lead to a 5% to 6% increase in supply by the end of the year. “It’s helpful, but it doesn’t fundamentally change the dynamics of the global diesel market,” he told CNN.
He also commented on the way Trump presented the figures. As he noted, there’s a reason the U.S. president chose to talk about metric tons instead of barrels: the number sounds larger to the general public.
In his view, this is more of a political move than a development capable of turning the market on its head.
The big question: Does Russia have the diesel it’s promising?
Analysts’ doubts are not limited to the impact the agreement could have on prices. They also concern whether Moscow is actually able to supply those specific quantities.
Russia had banned diesel exports in early July, as Ukrainian drone strikes on refineries had caused serious production problems and fuel shortages within the country. The ban, which was extended last month, removed approximately 800,000 barrels per day from the global market, according to CNN.
These losses compounded the pressures already caused in the energy market by the U.S. war with Iran.
Therefore, for the agreement announced by Trump to be implemented, Russia would not only have to lift its export restrictions but also have sufficient production capacity at a time when its refineries continue to be targeted by Ukrainian attacks.
Gregory Brou, an analyst at the Eurasia Group specializing in energy, climate, and natural resources, described the potential impact of the agreement as a temporary “band-aid.”
Even if Putin delivers the diesel, he assessed, the move would amount to nothing more than a short-term solution.
He also expressed the suspicion that the Russian president may be expecting, in return, an end to Ukrainian attacks on refineries. This, however, is the analyst’s assessment and not a confirmed term of the agreement.
Despite these reservations, the market initially reacted positively to the announcement, with diesel futures falling about 4% at Friday’s close. This short-term reaction, however, does not answer the question of whether prices will remain lower.
The blow to sanctions and Zelenskyy’s outrage
Beyond the agreement’s effectiveness in the fuel market, former U.S. officials also point to a second, politically more sensitive dimension: the message Washington is sending regarding sanctions against Russia.
Richard Neffio, a former high-ranking State Department official responsible for sanctions policy, warned on CNN that the damage to the broader sanctions regime could be particularly significant.
The question this raises is how the U.S. can ask other countries to comply with sanctions when it itself cites economic necessity to justify easing them.
For Ukraine, the issue is even more pressing. Kyiv has long maintained that Russia’s oil and natural gas revenues are a major source of funding for its war effort.
Volodymyr Zelenskyy called the decision “a weak decision by strong partners,” accusing them of allowing Putin to continue the war with these additional revenues.
His reaction was even more intense given the timing. The agreement was announced while a Ukrainian delegation was in Florida for talks with Trump’s special envoy, Steve Whitcroft, and the U.S. president’s son-in-law, Jared Kushner.
In other words, while the Ukrainians were negotiating with the American side, Trump was talking with Putin about a deal that, according to Zelenskyy, would bring more money to Moscow.
The six U.S. demands that Kyiv ignored
Axios sheds light on the background of the decision, according to which Trump reached the agreement with Putin after Zelenskyy ignored approximately six U.S. requests to halt Ukrainian attacks on Russian refineries.
As the report states, citing a U.S. official with knowledge of the talks, the White House believes that the Ukrainian strikes, while causing serious damage to the Russian energy industry, are simultaneously straining the global fuel supply and, by extension, affecting American consumers.
Zelenskyy had proposed a mutual agreement: Ukraine would stop striking Russian refineries, on the condition that Russia would halt its attacks on Ukrainian power plants. According to Axios, Trump did not accept this link, asking Kyiv to halt the strikes without a corresponding Russian commitment.
The tension carried over into Friday’s eight-hour talks in Miami, where Whitcomb and Kushner briefed the Ukrainian delegation on the upcoming communication between Trump – Putin and the intention to ease restrictions on Russian diesel exports.
A Ukrainian official claimed that a warning was even issued regarding a possible suspension of U.S. intelligence sharing with Kyiv, if attacks on the refineries continued. The U.S. side denies that such a threat was made.
Putin’s Political Gain and Uncertainty About Peace
According to CNN, a former high-ranking State Department official believes that Putin may have already reaped the political benefit he sought, regardless of whether he will ultimately be able to deliver the diesel.
His assessment is that the Russian president gave Trump the opportunity to present a deal with potential economic impact ahead of the midterm elections, while at the same time achieving a shift in the U.S. stance toward Russian energy exports.
He considers it anything but a coincidence that the phone call coincided with the talks between U.S. envoys and the Ukrainian delegation.
There is, moreover, another critical factor. Despite the energy agreement, Putin did not commit to an immediate resumption of peace negotiations with Ukraine.
According to the Russian report on the phone call, which lasted about 90 minutes, Moscow will consider when the talks could resume. No specific timeline was announced.
Thus, the agreement leaves two distinct questions open. The first is economic: whether the Russian supplies will actually reach the market and whether they will be sufficient to significantly lower diesel prices. The second is geopolitical: whether easing the pressure on Moscow can bring about any progress in the negotiations or whether it will simply strengthen Putin’s negotiating position.
For now, analysts cited by CNN appear skeptical about the first point, while developments have yet to provide an answer regarding the second.
Source: protothema.gr
