US President Donald Trump’s diesel deal with Russian President Vladimir Putin caused a storm of protest but he did it anyway in an attempt to bring prices down ahead of next week’s midterm elections. Three ships are on their way to the US full of Russian diesel. The problem is no one wants to buy it, Kommersant reports.

Putin has done Trump a political favour by promising to restart diesel exports to ease the price pressure, but he now seems to have reneged on that promise too in what is turning into a perfect storm for the White House as the crucial elections loom: the Kremlin announced on October 29 that it would keep its diesel export ban until the end of the year but let selected refiners ship under quotas.

The ban on exports by producers was due to expire on October 31 will be extended, an industry source told Kommersant. However, several oil companies have already received quota permits, another source told the paper. A separate ban on exports by traders that do not refine fuel already runs to the end of January 2027.

Quotas will rise to 2mn tonnes in November, about 500,000 barrels a day and four times the October level, Reuters reported the same day, citing two people familiar with the discussions. The government exempted several refiners in October with quotas totalling 500,000 tonnes, and a new order widening the list of exempt plants and setting fresh export limits is expected in early November.

The quota system lets Moscow decide refinery by refinery how much diesel leaves the country. That squares two commitments: keeping its own pumps supplied after a summer in which Ukrainian drone strikes on refineries forced rationing and a full export ban in July, and delivering the fuel that US President Donald Trump announced after his October 9 call with President Vladimir Putin. Trump said Russia would ship 300,000 tonnes immediately, 500,000 tonnes in November and 1mn tonnes in December.

A November quota of 2mn tonnes is four times what Trump said would come in that month, so most of the extra diesel looks set for Russia's established buyers rather than the US. Turkey took about 34% of Russian diesel loadings this year and Brazil 24%, and both resumed buying within days of the ban being eased. Exports have averaged about 345,000 b/d so far this year, so a full November quota would take them well above that run rate.

Moscow says it has the fuel. Deputy Prime Minister Alexander Novak said on October 16 that Russia's diesel production capacity was twice domestic demand. Refinery utilisation rose by 25% between the start and the end of October as drone attacks subsided, and nominal diesel output now exceeds domestic consumption by about 40%, so refiners need an export outlet to avoid a glut at home, Reuters' sources said.

Some large oil companies have started shipping more fuel to domestic buyers and small-wholesale prices are falling, one of Kommersant's sources said, adding that exports through the Black Sea would stay difficult for logistical reasons even without a ban. Another expects the quota mechanism to outlive the ban and to be applied to petrol, where a full export ban on petrol and jet fuel remains in force.

Traders rebuff Russian diesel

The US end of the deal is going less smoothly. The Malta-flagged Agioi Fanendes loaded about 40,000 tonnes of ultra-low-sulphur diesel at the Baltic port of Primorsk on October 22 and signalled New York, with arrival expected on November 7, Reuters reported, citing LSEG data. The buyer and seller were not identified.

The tanker was idling off Skagen in Denmark on October 26, Lloyd's List reported, and its destination has since been changed to "for orders", the shipping term for a cargo with no fixed discharge port.

Two more tankers are behind it. The Sierra Leone-flagged Leruo, which the EU, the UK and Canada sanctioned last year, loaded diesel at Primorsk on October 16 and is signalling the US Atlantic coast for around November 11. The Talisman, believed to be under US and EU sanctions, is due around November 9. The three carry a combined 924,000 barrels, about a third of the US transport sector's daily diesel consumption, Newsweek reported, citing Kpler tracking data. Novak said a fourth tanker would sail on October 28.

Traders are afraid of being sued if they buy the diesel because of legal confusion over the legitimacy of the  waiver. The US Treasury's General Licence 135 authorises transactions in Russian diesel until April 7, 2027, but the 2022 Ending Importation of Russian Oil Act bans the imports, and Congress has not lifted it. Senator Richard Blumenthal wrote on October 27 to Athanasios Martinos, managing director of Eastern Mediterranean Maritime, which manages the Agioi Fanendes, asking him to recall the ship.

"The President may have given a license to facilitate this transaction, but only Congress can make it legally valid," Blumenthal wrote, warning that the company would otherwise be "engaged in an illegal transaction or aiding and abetting it".

A bipartisan group of lawmakers wrote on October 24 to six large US banks and to the port authorities of New York and New Jersey, Houston, Beaumont and Corpus Christi, asking them to keep records and warning against handling the cargoes. Analysts at Rapidan Energy Group expect the diesel may end up in Brazil, which has bought large volumes of Russian diesel since 2022.

For Europe the gain is indirect. EU and UK embargoes on Russian refined products stay in force, so none of this fuel can land there. But every tonne Turkey, Brazil and Morocco take from Russia leaves more US, Indian and Gulf diesel for European buyers in a market tightened by the Hormuz disruption. India's Reliance pushed its diesel exports to an 18-month high in October, and France will release 10mn barrels of diesel from its strategic reserves on November 1 to bring down record pump prices.