Trump announces Russian diesel supplies as US prices remain high

Donald Trump said on October 9 that he had reached an agreement with Vladimir Putin on Russian diesel supplies. The announcement followed earlier administration measures that had not reduced near-record US prices.

Trump said Russia would provide more than 300,000 tonnes immediately, another 500,000 tonnes in November and one million tonnes thereafter. These are announced volumes rather than confirmation of completed deliveries.

Reuters reported earlier on October 9 that Thursday's average US diesel price was $6.28 per gallon, according to AAA. That was approximately 70% above its level before the US-Israeli war with Iran. High costs particularly affect farmers and trucking businesses.

The administration is relying on allies to release 100 million barrels of oil and petroleum products from reserves. Reuters reported that these volumes largely reflected remaining commitments from a March release by International Energy Agency members. A White House official disputed that interpretation, saying negotiations secured an accelerated timetable and priority for diesel.

Another measure temporarily permits red-dyed diesel on public roads. Such fuel is normally intended for off-road uses. The presidential order defers the federal tax and waives the corresponding penalties through year-end.

However, major sellers remain cautious about uncertain tax obligations, logistics and differences between state rules. NATSO president David Fialkov doubts most major market participants will sell the fuel. The White House expects Treasury Department guidance to clarify the arrangements.

Baringa economist Caspian Conran considers the tight global market for refined products the central problem. He believes tax and reserve measures can provide only temporary relief. Their effectiveness carries particular political significance before the November 3 congressional elections.