The first tanker carrying diesel from Russia to the United States departed from the port of Primorsk located in the Baltic Sea on Friday and is currently heading towards New York. This shipment is expected to arrive at its destination by November 7. The medium-sized tanker Agioi Fanendes, flying the Maltese flag, has loaded approximately 40,000 tons (equivalent to 300,000 barrels) of ultra-low sulfur diesel (ULSD).
The Trump-Putin Agreement
This shipment comes following an agreement announced by Donald Trump, the President of the United States, with Vladimir Putin, the President of Russia, earlier this month. This agreement is one of Trump's efforts to reduce high diesel prices in the United States before the midterm elections on November 3. However, the first shipment of Russian diesel will not arrive before the elections.
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Given that the volume of these shipments is very small compared to the global diesel market demand, analysts believe that these shipments cannot have a significant impact on the tight diesel market. Trump stated on October 9 when announcing this agreement that Russia would immediately supply more than 300,000 tons of diesel to the global market, with 500,000 tons in November and another million tons in later stages.
Russia's Response to Market Demand
Following the Trump-Putin agreement, the Russian government partially lifted its diesel export ban the next day, which came into effect on October 10. This action allows Russia to introduce 500,000 tons of diesel to the global market in the first phase. Reports also indicate that other diesel shipments have been loaded from the port of Primorsk in the past week, but their final destinations are still unclear.
Separate ship tracking data shows that at least two tankers carrying Russian diesel have recently announced their destinations in Turkey and Brazil. These two countries have been key buyers of Russian diesel in recent years, especially after the European Union banned imports of all oil products from Russia due to the invasion of Ukraine in early 2023.
Meanwhile, diesel prices in the United States are once again on the rise as crude oil prices have increased due to escalating tensions in the Middle East. The average diesel price in the United States reached $6.3172 per gallon on October 23, up from $6.3090 on October 22, and significantly higher than $3.6315 per gallon on the same day last year.
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