Diesel production in Russia has increased in October due to the issuance of export quotas by Moscow to the United States. In the first half of this month, daily production reached around 160,000 tons, down from 175,000 tons in September. However, with the arrival of new quotas in mid-October, production has risen towards 180,000 tons per day.
Domestic Consumption and Exports
Domestic diesel consumption in Russia typically decreases to about 140,000 tons per day in October, following the end of the grain harvest season and summer. This frees up at least 40,000 tons per day, equivalent to over one million tons per month, for export to foreign markets. According to estimates, between 200,000 and 300,000 tons of this amount will likely be sent to neighboring countries under intergovernmental agreements.
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Impact of Sanctions and Exports to the United States
It is expected that Moscow will maintain the diesel export ban, which has been in effect since August, and will use quotas to control the amount of exports. U.S. President Donald Trump announced on October 9 that Russia would quickly send over 300,000 tons of diesel and would send 500,000 tons in November and another million tons thereafter. Additionally, the shipment of another 3 million tons depends on the conditions of Russian refineries.
The export began with the Maltese-flagged vessel "Egiou Fernandez" on October 23 from Primors with about 40,000 tons of ultra-low sulfur diesel, and this shipment is expected to arrive in New York on November 7. The average price of diesel in the United States on that day reached $6.32 per gallon, up from $3.63 last year.
Kremlin spokesman Dmitry Peskov stated that shipments to the United States will continue regularly. Two other tankers carrying Russian diesel have also marked destinations in Turkey and Brazil. However, analysts doubt that these volumes will have a significant impact on the market.
Standard Chartered Bank has warned that Russia will face challenges in increasing diesel production in the short term, as Ukrainian drone attacks have damaged its refineries, and repairs will take months. Additionally, shipments sent to American buyers will be taken away from existing Russian customers.
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