President Donald Trump said on Friday that Russia had agreed to immediately supply diesel to US and global markets in an effort to lower fuel prices ahead of the US midterm elections, although analysts said the amounts would likely not reduce prices greatly.
The move comes as the price of diesel, used in agriculture, heating homes and trucking, is near a record high. The November 3 congressional elections will determine control of Congress.
Trump said on social media he had a "highly successful" discussion with President Vladimir Putin in which they agreed that Russia will immediately supply more than 300,000 metric tons of diesel to US and global markets.
An envoy for Putin, Kirill Dmitriev, praised cooperation between Russia and the United States on diesel and energy in a post on X shortly after the call.
The unusual move comes after the US imposed sanctions on Russian energy companies over Russia's full-scale war with Ukraine that began in 2022.
Ukrainian President Volodymyr Zelenskiy criticized Trump's move. "Gifts to Putin will not bring peace or any benefit to the civilized world. Russia will 'repay' the diesel with further terror and perfidy," he said on X.
The US Treasury Department issued a general license on Friday allowing importation of Russian diesel until April 7.
Trump said Russia would supply another 500,000 tons in November and a further 1 million tons "immediately thereafter." Even more would follow, Trump said, "based on the condition of their diesel refineries," which have been damaged by Ukrainian attacks.
'NOTHING BURGER'
Analysts said the agreement was unlikely to lead to sustained lower fuel prices. "I cannot overstate how much of a nothing burger this is," Rory Johnston, an oil market researcher and founder of CommodityContext.com, said on X, adding that Russia usually exports much more diesel when its refinery fleet is not under attack.
The 300,000 tons to be immediately delivered is equal to about 2.25 million barrels of diesel. The US exports about 1.5 million barrels of diesel per day.
"It's clearly not a fix, but another stream to aid a very tight diesel market," said Jim Mitchell, an analyst at consultancy Wood Mackenzie.
Diesel prices, which can drive inflation, are up 70% since the US and Israel launched the war with Iran on February 28. The wars in Iran and Ukraine have triggered a severe global fuel supply crunch, pushing average US diesel prices to $6.28 a gallon on Thursday, according to the AAA motorist group.
The price climb is despite two recent moves by Trump to boost supplies of the fuel: pressuring allies to release emergency reserves and expanding access to tax-exempt red-dyed diesel, which is normally used for farm equipment.
US diesel futures fell sharply following news of the deal and were trading at $4.64 a gallon, down more than 4.8%.
"Lower prices for Americans, especially our Great Farmers, Ranchers, and Truckers, is my Greatest Priority," Trump said.
DEFENSE PRODUCTION ACT
Three industry sources said earlier on Friday that Trump will issue a directive in the coming days to some US department heads to find ways to control diesel prices.
The directive, which they said could take the form of a presidential memo, will push officials to find ways to bypass local and state regulations blocking energy production and use the Cold War-era Defense Production Act to increase output of oil and fuel.
Under the DPA, the president can authorize US-backed loans or loan guarantees to expand domestic manufacturing of critical materials and to require companies to prioritize government contracts for essential goods.
The White House has been weighing how to use the DPA to expand refining capacity as the war with Iran exposes US vulnerability to supply disruptions and price spikes.
Refining executives told administration officials last month that federal money would be better directed toward making refineries more efficient or expanding plants rather than financing a new refinery, which would be more costly and take years to complete.
