Vladimir Putin and Donald Trump have agreed that a total of 4.8 million tons of Russian diesel will be sold in installments to the American and global market. Just three weeks ago, Trump signed Congress' decision on new sanctions against, among other things, Russia's energy sector, but they are now being exempted.
- It came unexpectedly when it comes to American policy towards Russia, the USA is, after all, Ukraine's ally. The sudden breaking of economic isolation is surprising. It's hard to see that it wouldn't have something to do with the midterm elections, says Dag Blanck, senior professor of North American studies at Uppsala University.
Republican support in the forecasts is gloomy ahead of the November 3 mid-term elections. This applies especially to the House of Representatives, but lately also the Senate and Donald Trump have unusually low trust figures.
- Then fuel prices are an important issue and who primarily uses diesel, yes, for example farmers. You can see in the latest opinion polls from certain agriculture-heavy states in the Midwest, such as Iowa and Kansas, that it is a much more even situation, says Dag Blanck.
- Kansas hasn't had a Democratic senator in almost a hundred years, but now Adam Hamilton is tied with Republican incumbent Roger Marshall. Some describe the diesel agreement as an "act of desperation".
Trump enthusiastically writes on his platform Truth Social that diesel prices worldwide will plummet to a record high and fast, but at least it is not yet noted on the graphs of the major industry players. An otherwise critical Robert Bergqvist, senior economist at SEB, says that he can certainly imagine that diesel prices in particular could fall somewhat and that from an inflation perspective this could be important.
- They have run away and both oil and fossil gases remain at high levels, so anything that can lead to energy costs going down could ease the inflationary pressure. But with that said, it is not at all decisive for where inflation goes, either in the US or the rest of the world, says Robert Bergqvist.
He does not see the agreement as something financially motivated, but calls it primarily "a desperate attempt to fish for votes". It is worth emphasizing that the global energy market is much more than diesel and, in terms of the world's total demand, 4.8 million tons is not a very significant volume.
There is also a tragedy at the bottom of this, because the USA's eased sanctions against Russia means that they can sell their fuel at market price and strengthen their war capital.
- As an economist, I would not, based on this agreement, start screwing up any forecasts for the interest rate or inflation. The US stock markets closed higher on Friday, but this is not the reason why the markets are in a better mood. I am more concerned about the security policy consequences of such extremely short-term thinking, says Robert Bergqvist.
On the contrary, a prolonged Russian war in Ukraine could lead to even more disruptions in the global energy infrastructure. Among other things, it is close at hand to believe that the Ukrainian armed forces continue to target that kind of target in Russia and, as far as is known, no solution for the Strait of Hormuz is in sight.
- Prices are determined like everything else by supply and demand, but there is also an uncertainty factor, a risk component, which is linked to what one thinks about the consequences such as this can have. Can it make the energy market reduce its anxiety going forward or not? says Robert Bergqvist.
While Trump and Putin spoke on the phone for 1.5 hours on Friday, negotiations between the United States and Ukraine were underway in Florida. Ukrainian representatives, including President Volodymyr Zelenskyi, have of course expressed strong criticism of the diesel deal and there is reason to believe that the American delegation is now reluctant to see the Ukrainian defense strike against Russian energy facilities.
- Trump almost always reacts depending on how it affects him, so if he were to perceive Ukraine's actions as a problem for the diesel agreement, it would be a negative reaction, says Dag Blanck.
- It is possible that there are people in his vicinity who can hold him back, but all experience shows that it is he, all the time, who is superior to everything.
