Donald Trump, the President of the United States, announced on October 9 an agreement with Vladimir Putin for the supply of Russian diesel to the U.S. and global markets. This agreement has been announced with the goal of controlling fuel prices and comes ahead of the U.S. midterm elections. According to Trump, the initial supply will be over 300,000 tons, followed by 500,000 tons in November, one million tons in the next phase, and another three million tons subsequently. Additionally, Washington has temporarily eased sanctions related to Russian diesel shipments until April 2027.
Impact of the Agreement on the Global Energy Market
What effect will this agreement have on the global energy market, the Strait of Hormuz, and Iran's position? Hashim Oraki, a professor at Sharif University of Technology and head of the Iranian Energy Associations Union, stated in his assessment of this agreement: "In the short term, this agreement will have more of a psychological effect on the U.S. market than a significant impact on global energy prices." Oraki pointed out that even if this agreement is implemented in several phases and the supply reaches over four and a half million tons, it is not a significant figure compared to the daily consumption in the U.S. Therefore, it is not expected that this agreement alone will create a noticeable change in the price of diesel in the U.S. or the equations of the global energy market.
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Political and Geopolitical Consequences
Oraki emphasized that the main importance of this agreement should be sought in its political and geopolitical consequences. The closeness of Washington and Moscow could affect U.S. relations with Europe and may change the U.S. stance regarding the Ukraine war. This energy expert said: "If the two countries achieve broader cooperation, a new composition in the global energy market will emerge that could affect the position of other producers." He also referred to the impact of this agreement on the Strait of Hormuz, stating: "The extent of the impact of this cooperation depends on the depth of the relations between the two countries. If the U.S. and Russia achieve closer cooperation, they could become more influential players in the global oil and gas market."
Ultimately, Oraki explained that a potential agreement between the U.S. and Russia does not mean a sudden increase in Russia's oil or diesel production capacity, and changing the destination of shipments does not necessarily mean an increase in global supply. Considering the global oil demand, which is about 105 million barrels per day, the discussed volume does not have a significant share compared to this amount. As a result, it cannot be expected that the global prices of oil and diesel will significantly decrease solely due to this agreement.
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