US President Donald Trump announced on Thursday that he has reached an agreement with Russian President Vladimir Putin to allow Moscow to immediately release diesel into the global market. The deal involves the immediate release of 300,000 tonnes of diesel, followed by an additional 500,000 tonnes in November and a further one million tonnes at a later date.
Trump celebrated the agreement on his social media platform, Truth Social, declaring that diesel prices for Americans and the world would drop in “record numbers” and “fast.” Shortly after the announcement, the US Treasury formally issued a temporary license permitting the entry of Russian diesel into the market.
The move comes amid soaring fuel costs in the United States, where the average diesel price currently stands at $6.28 per gallon according to the AAA. This represents a doubling of prices since the conflict with Iran began in February, from a record high of $6.53 recorded at the end of September. The rising cost of living is placing significant pressure on the Republican party ahead of the midterm elections.
Kirill Dmitriev, an envoy for Putin, welcomed the arrangement on social media, stating that cooperation on diesel and energy between the two nations would benefit the world. However, Ukrainian President Volodymyr Zelensky strongly condemned the deal.
Zelensky argued that easing sanctions on Russia plays into Moscow’s hands and would extend the duration of the war. “Allowing Russia to sell petroleum products is an investment in a war that must be ended, not prolonged,” he wrote, adding that Russia would repay the diesel with “further terror.”
The impact of the deal on global fuel prices remains uncertain. The Brent crude oil benchmark, a key global indicator, is currently trading above $103 a barrel, significantly higher than the approximately $73 a barrel seen before the war with Iran began.
This agreement is the latest in a series of efforts by Trump to lower domestic fuel prices. Earlier this week, he suggested considering the suspension of the federal tax on gasoline and announced that “red dye” diesel would be allowed for use on US highways without facing federal taxation. Additionally, Trump has successfully pressured G7 nations to release 100 million barrels of oil and diesel from their strategic stockpiles to alleviate supply concerns.
The BBC has contacted the White House for clarification regarding any reimbursement the United States may be providing Russia in exchange for the release of the diesel.
So we’re paying Russian fuel subsidies to fight Russia? I’m confused on the strategy here, but the economics sound flawed.
Zelensky is right. This doesn’t lower prices, it just funds Putin’s war machine. A dangerous trade-off indeed.