Oil traders avoid Russian diesel after Trump-Putin agreement
Several tankers carrying Russian diesel have been redirected away from U.S. ports amid legal uncertainty, highlighting traders' reluctance to purchase the fuel despite a temporary U.S. Treasury exemption.
At least three tankers that were set to deliver Russian diesel to the United States have altered their routes, raising doubts about the implementation of President Donald Trump’s October agreement with Russian President Vladimir Putin. The vessels, originally bound for the U.S. East Coast, are now heading toward Brazil, the Mediterranean or have an undefined destination, according to marine-analytics firm Kpler and vessel-tracking service MarineTraffic.
The deal, announced after a call between Trump and Putin on October 9, pledged more than 300,000 tonnes of diesel for immediate release, followed by additional shipments of 500,000 tonnes in November and up to 1 million tonnes thereafter. The Treasury’s Office of Foreign Assets Control issued a temporary sanctions exemption that would allow the diesel to be sold, delivered and imported until early April, despite an existing congressional ban on Russian energy imports.
Analysts say the volume of diesel currently available is far below the promised amounts and would have a minimal impact on U.S. fuel supplies. “The reported shipment is equivalent to roughly two hours of U.S. distillate consumption,” said Aarathi Krishnan, CEO of Raksha Intelligence. “Even if it arrives as planned, it will make very little difference to national supply.”
Legal risk is the primary reason traders are shying away from the cargo. New Jersey Governor Mikie Sherrill warned port operators that any attempt to handle Russian diesel could result in “harsh penalties,” arguing that the administration lacks authority to override the congressional ban. The Treasury maintains that the exemption complies with applicable laws, but no court has yet ruled on the dispute.
“It’s clear there’s hesitancy here in bringing these barrels onshore just because of the implications of doing so,” said Matt Smith, an analyst at Kpler.
Given the regulatory uncertainty, experts expect the diverted tankers to discharge their cargo outside the United States. “Because of regulatory and sanctions concerns, we may not see this cargo discharge on the U.S. Atlantic coast,” Smith added.
The Kremlin, however, insists the agreement remains viable. Spokesman Dmitry Peskov said all the diesel will find buyers, and Putin’s special envoy Kirill Dmitriev dismissed reports of diversions as “fake,” claiming the ships are still on course to the United States.