President Donald Trump's latest effort to ease a US diesel crunch before November's midterm elections is unlikely to make a substantial difference to prices, analysts say, despite a new Treasury licence easing sanctions on Russian fuel and a declaration of an 'energy ceasefire' between Russia and Ukraine.
Trump announced on Friday a deal for Russia to release 300,000 metric tons of diesel to the US and global markets immediately, followed by 500,000 tons in November and 1 million tons after that. Moscow would deliver another 3 million tons depending on the condition of its refineries, Trump said.
On Sunday, Trump declared an 'energy ceasefire' between Russia and Ukraine, a move that surprised policymakers around the world, including in Kyiv. Oil prices fell on Monday before later rising, even as Russia struck a power plant shortly after the announcement.
The push comes as diesel prices hit a record average of $6.5276 a gallon in late September, according to AAA, with the wars in Ukraine and the Middle East weighing on supply. The Pew Research Center found 84% of registered voters say the economy is 'very important' to their vote, and Trump has sought to tame inflation before elections in which Republicans risk losing control of both houses of Congress.
Mohit Kumar, chief European economist at Jefferies, said in a note that Trump was 'exploring all avenues' to bring down diesel prices before the midterms. But he said the deal had drawn opposition both within the US and from European leaders because it would bypass Russian sanctions in place, and that 'the volumes agreed are unlikely to make a substantial difference.'
The US Treasury has issued a temporary license easing sanctions on Russian diesel to facilitate the deal. Lombard Odier analysts described the agreement, alongside Chinese plans to resume refined-fuel exports, as potentially significant for global diesel supply.