Trump's Russian diesel deal adds 800,000 tons by November to a market paying $6.28 a gallon

The US national average for diesel was nearly $6.28 a gallon on the day Trump announced the deal. That is about 25 cents under the $6.53 record AAA logged on September 22 ^[9][10][20]. The decline came before any Russian cargo moved. Any relief from the deal has to be measured from $6.28, which is still about $2.60, or 71%, above the price of almost $3.68 a year earlier ^[21].

The deal has three tranches. More than 300,000 tons are due immediately and 500,000 tons in November, with 4 million more tons to follow at an unstated later date ^[1][2]. Of roughly 4.8 million tons in all, about one-sixth has a delivery month attached ^[19][22]. The November tranche lands in the month of the Nov. 3 midterms, and an AP-NORC poll shows Trump's approval on the economy at a new low ^[13]. Fortune's report does not give a price for the diesel, a date for the larger tranche, or a US consumption figure to measure any of it against.

The analysts Fortune quoted split three ways on what the volume does. Michael Lynch, a distinguished fellow at the Energy Policy Research Foundation, treats it as a transfer. "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," he said ^[14]. His best case is regional: "The best you could hope for is a tiny dip in prices locally in places like the New York-New Jersey area, Philadelphia maybe" ^[15].

Daniel Sternoff of the Columbia Center on Global Energy Policy sees possible net supply. In July Russia moved to ban diesel exports after Ukrainian drone strikes on its refineries. If it can now export again, he said, that will help stabilize global prices ^[4]. His limit is the Strait of Hormuz. Disruption there from the eight-month US war with Iran keeps Middle East refining capacity off the world market ^[5][8]. "Refined products like diesel are still barely half of prewar levels," Sternoff said, adding that extra Russian diesel "might take the edge off of prices, but it will not substantially lower them" ^[6][16].

Clayton Seigle of the Center for Strategic and International Studies said the deal benefits the seller ^[7]. In his account, Russia wants to sell off its stock of summer-grade diesel and shift to the heavier winter and arctic grades it will need in the coming months ^[7]. "I don't think it'll be enough to materially lower prices in the United States or Europe," Seigle said ^[17].

We think Lynch and Seigle are describing the first 800,000 tons and Sternoff is describing the 4 million. Russia needs to move its summer-grade surplus and would have found a buyer somewhere. So the dated cargoes mostly change who receives them, or rather, which buyer has to go looking for replacement barrels ^[18][7][14]. The undated tranche could count as new supply if Russia's July export ban is actually being lifted ^[2][4]. Until then, freight absorbs the price. Diesel powers many freight and delivery networks. Some businesses already add fees to online orders and mailed packages, and perishables such as meat and produce feel it first ^[11][12].

Washington has dropped a ban it held since the start of the Ukraine war in exchange for a dated volume that all three analysts expect to do little to prices ^[3][16][17]. Two things would prove that view wrong: a national average well below $6.28 before Hormuz reopens, or a dip that spreads beyond the Northeast cities Lynch named ^[10][15].