Donald Trump’s agreement with Vladimir Putin to lift sanctions on Russian diesel imports is not expected to lower U.S. diesel prices significantly, analysts say. The deal, announced on Friday, includes an immediate release of 300,000 tonnes of diesel. This will be followed by 500,000 tonnes in November and an additional 1 million tonnes later. However, experts believe this total volume is too small to affect current prices. Diesel prices have surged nearly 70% since the start of the Iran conflict, reaching about $6.30 per gallon, according to the American Automobile Association.
Key Details
Analysts, including Ashley Kelty from Panmure Liberum, noted that the initial shipment is too small to make a difference. He said, "They are going to have to charter vessels, load them and transport the cargo to the US," pointing out logistical challenges that could delay the diesel's arrival. The deal has faced criticism from U.S. allies, including the UK. Defence Secretary Wes Streeting expressed disapproval, stating that the focus should be on increasing pressure on Russia instead of easing sanctions.
Background
The agreement has also raised concerns with Ukrainian President Volodymyr Zelensky. He warned that it could allow Moscow to fund its military efforts. In response to the criticism, Trump suggested that Ukraine should consider a new leader who can negotiate peace with Russia. Streeting, however, reaffirmed the UK’s support for Ukraine, stating that the responsibility for the ongoing conflict lies with Putin’s ambitions.
The diesel deal may lead to limited market adjustments, especially in the energy sector. However, analysts expect it will not significantly reduce high diesel prices in the U.S. Investors will be watching for further developments in U.S.-Russia relations and any potential changes in the conflict dynamics in Ukraine as the midterm elections approach.
Based on reporting by: theguardian.com, bbc.com