(Seoul = Yonhap News) Reporter Kwak Min-seo = U.S. President Donald Trump and Russian President Vladimir Putin agreed to a surprise 'railway deal' on the 9th (local time), but analysis suggests that the impact of this agreement on actual oil prices will be minimal.
There is also an assessment that President Putin achieved a 'strategic victory' by reaching an agreement with President Trump, who is urgently in a hurry to achieve results ahead of the midterm elections in November.
According to CNN, the supply volume of diesel agreed between the US and Russia on this day is 300,000 tons this month and 500,000 tons next month.
Converted to barrels, this is approximately 6 million barrels. CNN analyzed that this is only enough to cover the demand for about 1.5 days' worth of diesel in the United States.
Previously, President Trump said in a post on the social media TruthSocial, "Russia has agreed to immediately supply more than 300,000 tons of diesel fuel to the U.S. and global markets, an additional 500,000 tons in November, and 1 million tons immediately thereafter."
He added, “Russia will supply an additional 3 million tons of diesel fuel within a short period of time, considering the state of its diesel refinery facilities.” The total volume of Russian diesel supplied by President Trump amounts to 4.8 million tons.
However, even if we assume that Russia supplies as much diesel as possible, it has been pointed out that the quantity is still limited.
Dan Pickering, Chief Investment Officer (CIO) of Pickering Energy Partners, an energy investment company, told CNN, "The increase in supply due to this agreement may only be around 5-6%," and "it will not be enough to bring meaningful changes to the global diesel market."
He pointed out that the reason President Trump announced the supply volume in tons rather than barrels, which is the normal unit, is because “to the general public, the number expressed in tons appears larger,” adding, “This is closer to a political act than a measure that can change the market.”
The American daily New York Times (NYT) also pointed out that this supply volume is insignificant compared to global diesel demand, which is approximately 30 million barrels per day.
Kevin Book, managing director of research firm Clearview Energy Partners, predicted that, assuming Russia actually fulfills its supply promises, the average daily supply could be limited to about 72,000 barrels in October, 124,000 barrels in November, and 240,000 to 720,000 barrels in the following months.
This is less than Russia's average daily diesel export volume (800,000 barrels) from October to December last year.
It is pointed out that, given the market structure, this transaction will not be of great help in stabilizing diesel prices.
Michael Lynch, a researcher at the Energy Policy Research Foundation, a nonpartisan research institute, told the Associated Press, "If the United States imports Russian diesel, it means that existing buyers will have to find other suppliers. Ultimately, prices will remain at the current level."
This means that this agreement may not increase the global supply itself, but may end up blocking the supply sources of existing supplies.
On the other hand, there are observations that this transaction could be of significant benefit from Russia's perspective.
Russia usually uses diesel as agricultural fuel, but demand for it decreases significantly during the winter.
Russia can take advantage of the seasonal fuel supply and demand situation to provide a small 'diplomatic carrot' to the United States while gaining great strategic benefit.
Clayton Siegl, an energy strategist at the Center for Strategic and International Studies (CSIS), told The Associated Press that the agreement could be a "tremendous benefit" to Russia as it seeks to offload its summer diesel inventory.
Furthermore, there is analysis that Russia may use this deal as leverage to prevent Ukraine from attacking its oil refineries.
“I have strong suspicions that Putin is expecting Ukraine to stop attacking oil refineries in return for ‘favors’ for Trump,” Gregory Brew, an analyst in Eurasia Group’s energy, climate and resources team, told CNN.
At the same time, Russia can expect the strategic effect of inducing division in the West, including the United States, which urgently needs to stabilize energy prices, and Europe, which wants to continue strong energy sanctions against Russia.
Edward Fishman, a senior fellow at the Council on Foreign Relations (CFR), said the agreement was "an empty promise aimed at further inflaming divisions within the transatlantic alliance" and "typical Putin's method."
At the same time, some are raising doubts about whether Russia can actually fulfill its supply promises.
This is because Russia is also experiencing an internal energy crisis due to recent attacks on oil refineries in Ukraine.
It is known that diesel has relative export capacity compared to gasoline, but considering production disruptions in Russia, additional supply may not be easy, according to analysis.
In fact, according to the British daily Financial Times (FT), the current Russian oil refinery operation rate is known to be only about 60%.
“The most curious thing about this agreement is where the diesel will come from,” said Michel Bruchard, director of policy and geopolitical risks at energy analysis firm Kpler. “Right now, exports are not the problem for Russia, but oil refineries are the problem.”
There is also an angry reaction in the American political world. This is because this deal was concluded less than a month after the bipartisan passage of the 2026 Lindsey O. Graham Anti-Russia and Iran Sanctions Act, which restricts energy exports to Russia, effectively fading sanctions against Russia.
U.S. Senate Democratic leaders argued, "This decision is tantamount to selling out Ukraine and our allies in a desperate attempt to open Trump's own political path."
Diesel prices also continue to skyrocket. Immediately after this announcement, diesel futures prices fell slightly, but the average retail price of diesel in the United States, as compiled by the American Automobile Association (AAA), recorded $6.28 per gallon. This is close to the all-time high ($6.52) recorded on the 22nd of last month.
