The agreement between the United States and Russia to supply the diesel needed for global markets, despite Russia's promises for exports, does not seem to have a significant impact on prices. Market observers believe that the amount of promised exports is so minimal that it cannot overcome the pressure of global supply shortages.
Details of the Agreement and Its Impact on the Market
The government of Donald Trump, the President of the United States, has announced that Russia will initially supply 300,000 tons (equivalent to 2 million and 250 thousand barrels) of diesel to the market. This amount will increase to 500,000 tons in November and then to one million tons. However, analysts believe that Russia cannot achieve sufficient production surplus in the short term to meet this target.
Michel Bruhard, director of policy and geopolitical risks at the shipping tracking company 'Kpler', pointed out that a daily surplus of 400,000 barrels of diesel is needed to significantly reduce prices in the current market. Meanwhile, the first shipment, which includes about 2 million and 200 thousand barrels, will only equate to about 73 thousand barrels per day.
Price Situation and Existing Challenges
The retail price of diesel in the United States surpassed $6 per gallon for the first time in September and has remained at this level since then. Caspian Canran, a senior economist at the consulting firm Baringa, has estimated that an immediate reduction in prices requires a surplus supply of 850,000 barrels per day in the market.
The recent agreement has also raised doubts about the actual impact on diesel supply in the United States. Currently, Russia produces about 1 million and 400 thousand barrels of diesel daily and consumes more than 1 million barrels domestically. Therefore, very little remains for export.
Shipping data shows that with the suspension of Washington's sanctions against Moscow, some shipments of Russian diesel are returning to their usual destinations, while shipping costs have significantly increased due to heightened security risks in the Black Sea.
The International Energy Agency has also warned of the possibility of continued fuel shortages worldwide until 2027. This situation could lead to increased price volatility in the global diesel market and create serious challenges for governments and consumers.
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