Russia's diesel exports doubled in October but couldn't be sold to the US! Buyers were unwilling to pick up the goods and diverted the routes of US tankers one after another due to legal and reputational risks
The Zhitong Finance App learned that US President Trump's diesel supply agreement with Russia last month helped double Russia's diesel exports in October — according to data from energy consulting agency Kpler, Russia's diesel exports reached 271,000 barrels per day in October, up from 135,000 barrels per day in September. However, since the diesel supply agreement came to a standstill due to legal disputes and corporate concerns in the US, buyers were unwilling to accept related goods. In the end, no batch of diesel goods arrived in the US, and many tankers originally scheduled to sail in the US have changed course.
According to reports, five tankers carrying Russian diesel were previously sailing to the Atlantic coast of the United States. Among them, an oil tanker flying the Maltese flag, Agioi Fanendes was scheduled to arrive on November 7. However, the tanker stayed in the North Atlantic before reaching the east coast of the United States, and the ship was still carrying about 40,000 tons of ultra-low sulphur diesel.
Kpler said, “Since November 9, the tanker has been almost stationary, and its draft depth has always remained at 11 meters, which indicates that the cargo on board has not yet been unloaded. As there are currently no confirmed destinations, it is still uncertain where the ship will sail next.”
Two other tankers originally bound for the US — the Leruo, owned by the Chinese owner in Hong Kong, and the Russian tanker Talisman — also changed course last week. Industry insiders said that US oil companies are unwilling to accept these goods and are mainly concerned that related transactions will cause legal liability and reputational risks. After the Democratic Party won the midterm elections, companies are still worried that participating in the deal may lead to investigation by members of the new National Assembly.
In a post posted on the social platform Truth Social on October 9, Trump said that after a “very successful discussion” with Putin, Russia agreed to “immediately” supply diesel to the US and global markets. Since Trump announced the agreement a month ago, Russia has re-sold diesel to the Middle East, North Africa, and South America, yet the US market has yet to welcome new imports. Michelle Wiese Bockmann, senior analyst at Sea News Windward, said, “There are political, compliance, and enforcement challenges in this.”
Jeremy Paner, a former US sanctions official and current partner at law firm Hughes Hubbard & Reed, said that the cost savings from buying lower-priced Russian diesel may be offset by legal expenses arising from future congressional investigations. Jeremy Paner said, “It's relatively easy for businesses to make the decision 'we don't want to touch this shipment. '”
Meanwhile, Ukraine resumed attacks on Russian refineries on October 30 after suspending operations for two weeks, while Russia extended the ban on diesel exports until the end of January next year. As a result, Russian diesel exports are likely to remain low in the next few months.
Furthermore, according to the arrangement announced by Trump, Russia plans to resume global diesel exports this year, which will be less than one-fifth of the export volume before the Ukrainian drone attack on refineries began. Even if these exports resume smoothly, the improvement in global diesel supply will be quite limited. Martin Lattes, chief commodity strategist at Morgan Stanley, said: “Total diesel exports from the Middle East and Russia are still at a very low level, and there has been little significant improvement in supply.” This means that diesel prices may remain high for some time to come, increasing the risk of continued high inflation.