Washington and Moscow's Diesel Agreement; When the Energy Crisis Overcomes Sanction Politics

1. Details of the diesel agreement between the United States and Russia

Trump wrote on his social media that Russia will immediately supply over 300,000 tons of diesel, 500,000 tons in November, and then another million tons. According to him, depending on the status of its refineries, Russia will deliver another 3 million tons in a short period.

On the same day, the Office of Foreign Assets Control of the U.S. Treasury issued 'General License 135'. This license permits the sale, delivery, and import of Russian diesel, including to the U.S., until April 7, 2027.

The Russian side, however, was more cautious. The Russian government confirmed Moscow's readiness to supply oil and products to the U.S. and global markets in a statement, but neither confirmed the figure of 4.8 million tons nor specified the timing or volume of each shipment.

Therefore, a distinction must be made between three stages:Political announcement of the agreement, legal authorization of the transaction, and actual delivery of the shipments.For now, only the first two stages have been finalized.

2. The root of the agreement: the diesel crisis on the eve of elections

Diesel, unlike gasoline, is not just fuel for personal vehicles. Road transport, agriculture, and industrial machinery depend on it, which is why its high price directly translates to the cost of goods and food. The average price of diesel in the U.S. reached $6.29 per gallon in September. This pressure has political costs for the Trump administration on the eve of the midterm elections on November 12 (November 3).

Washington had previously tested other options. Trump considered banning U.S. diesel exports, but after the G7 agreed to release 100 million barrels of oil and diesel, he abandoned it. The agreement with Moscow is the next link in this chain.

3. Can Russia really deliver this volume?

The most important question that has been overlooked in media coverage is the ability to deliver. There are three serious obstacles.

Refinery capacity.According to S&P Global Energy CERA estimates, nearly half of Russia's refining capacity was offline by the end of September. Ukrainian drone attacks have knocked out about 3.1 million barrels per day of this capacity.

Moscow's export ban itself.Russia has banned diesel exports since July and extended this ban until the end of October on October 8. According to the same report, it is unlikely that Russian diesel exports will return to pre-crisis levels by the end of the year and will likely remain limited until 2027.

The Kremlin's condition.Dmitry Peskov, the Kremlin spokesman, stated that domestic needs are not sufficiently met to lift the export ban. According to him, sanctions on Russian diesel imports must also be lifted, and this fuel must have unrestricted access to global markets.

4. How much is 4.8 million tons in market scale?

With a conventional conversion factor (each ton of diesel is about 7.45 barrels), the total announced volume is close to 36 million barrels. For comparison, the U.S. exported only 45.9 million barrels of diesel in September, meaning Trump's entire promise is less than one month's exports from the U.S. The first stage of 300,000 tons is also about 2.2 million barrels, which is less than two days of U.S. diesel exports.

A more important point is the difference between 'changing destination' and 'new supply'. Russian exports in the first half of the year were about one million barrels per day and have dropped to about 550,000 barrels since July. If new shipments merely change direction from previous Russian buyers to the U.S., global supply will not increase.

5. Market reaction: calming expectations, not ending shortages

The market reacted to the news. The low-sulfur diesel crack spread on NYMEX against WTI oil fell by $6.45 on October 9, reaching $96.80 per barrel. However, the market remains very tight. For comparison, the average of this index in the Gulf of Mexico in October 2025 was about $32. This means that the diesel refining margin is still nearly three times that of last year.

Daryl Fletcher, an analyst at Bannockburn Capital Markets, described this agreement as a small, short-term band-aid that, even if realized, will not fill the global supply gap.

6. Political costs for Washington

The agreement pits two U.S. foreign policy goals against each other: limiting Russian energy revenue and controlling domestic fuel prices. This conflict is not new. Earlier this year, when the Treasury issued a similar license for Russian oil, Zelensky considered it a weakening of pressure on Moscow, and representatives from both parties in Congress criticized it.

The economic lesson of this situation is clear: the more dependent the market is on the sanctioned commodity and the harder it is to replace, the higher the cost of maintaining the sanctions for the sanctioner.

7. Beyond diesel: the Nord Stream case

The diesel agreement is not the only sign of energy dialogue between the two countries. Reuters reported on October 8, citing five informed sources, that senior officials from both countries, including Jared Kushner, the U.S. special envoy, have discussed the entry of an American investor into the Nord Stream pipelines. However, these pipelines are sanctioned by the U.S. and the European Union, and any reactivation of them is illegal. Germany has also announced that it has found its alternatives.

Therefore, a distinction must be made betweencase-by-case economic cooperationandpolitical normalization.Current evidence only confirms the former.

8. The significance of this development for Iran

the product market is the main field.The 2026 crisis showed that the main shortage is in the refining loop, not in crude oil. This situation highlights the importance of refining capacity, fuel consumption efficiency, and the strategic value of completing the value chain for regional producers.

Sanctions are flexible against the market, but conditional.The recent agreement shows that sanctioning decisions change under market pressure. However, directly applying this experience to Iran is not accurate, as the structure of sanctions, political relations, and market conditions differ in each case.

Three scenarios

• Limited implementation:Part of the shipments is delivered, and prices temporarily stabilize, but the structural shortage in refining remains. This scenario is more consistent with the cautious assessment of analysts.

• Expansion of energy cooperation:Successful implementation of the agreement paves the way for cooperation in gas and products. The main obstacle to this scenario is European sanctions and Germany's opposition.

• Failure to implement:Russia's export ban, refining restrictions, or Kremlin conditions hinder delivery, and the psychological effect of the news is drained from the market.

Summary:The most important indicator of the success of this agreement is not its political announcement. The main indicator is the actual volume of delivered diesel, the net increase in global supply, and the sustainability of price reductions. The diesel agreement between Washington and Moscow is more a sign of the limitations of its implementation under energy crisis conditions than an end to sanction policy.

Why is it important?
This is the first time in the 2026 crisis that the U.S. officially opens the import route from Russia for a specific product. If deliveries occur, the global diesel trade flow will reshape. If not, it shows that political tools without refining capacity cannot contain prices for a long time.

Sources:S&P Global (October 9); Reuters (October 8); U.S. Energy Information Administration; Kyiv Post; Caspian Post/TASS