The U.S. may allow more Russian diesel onto the global market depending on Moscow's behavior, Energy Secretary Chris Wright told CNBC. Analysts say the shipments in the Trump-Putin deal are too small to materially lower prices, and the deal has drawn criticism from Ukraine and U.S. lawmakers.
Energy Secretary Chris Wright said the U.S. may allow more diesel fuel from Russia onto the global market, depending on Moscow's behavior. He made the comments in an interview with CNBC on Tuesday.
Wright framed the suspension of U.S. sanctions against Russian diesel exports earlier this month as an incentive for Moscow to end the war in Ukraine. He added that it will help with fuel supplies on the margin.
Tankers head for the Atlantic Coast
More tankers carrying Russian diesel could quite possibly set sail under the sanctions waiver, Wright said. The Russian-flagged tanker Talisman is expected to arrive on the U.S. East Coast on Nov. 9, according to MarineTraffic.
Another tanker, the Leruo, has departed Russia en route to the Atlantic Coast without explicitly declaring the U.S. as its destination.
A deal too small to move prices
President Donald Trump struck a deal with President Vladimir Putin for Russia to export 800,000 metric tons of diesel in October and November, followed by another million tons. Trump reached the agreement while facing political pressure to reduce surging diesel prices ahead of the U.S. midterm elections next Tuesday.
Fuel prices have spiked since the U.S. and Israel attacked Iran on Feb. 28. Even so, analysts say the volumes won't materially lower prices because they are small compared to total global demand of around 28 million barrels per day.
The first shipment of 300,000 tons is equivalent to about 75,000 barrels per day if rolled out over one month. The second tranche, of 500,000 tons, equals about 124,000 bpd.
Kyiv and senators object
Ukraine's President Volodymyr Zelenskyy has sharply criticized the diesel deal. Kyiv has pounded Russian refineries this year to cut the revenue the Kremlin collects from energy exports. The strikes forced Moscow to implement a diesel export ban in July.
The Kremlin has partially lifted that ban to fulfill the deal. Several Republican senators joined Democratic colleagues in a letter that, according to CNBC, condemned the agreement as "a gift to our adversary and a betrayal of our Allies."
Source: CNBC
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