President Donald Trump's initiative to import Russian diesel into the United States appears to be faltering. Two of the first tankers initially destined for the US have reportedly changed course, facing significant regulatory and political opposition.
Critical Supply Shortage Fuels Concerns
The diversions occur as US diesel inventories have plummeted below 100 million barrels for the first time in over two decades. This severe tightening of supplies for a fuel vital to the economy has raised alarms. Diesel prices at the pump have climbed to $6.27 per gallon, nearing their September record, while futures prices have surged over 60 percent since the onset of the Iran war.
Trump had previously struck an agreement with Russian President Vladimir Putin in the weeks leading up to the midterm elections. The deal aimed to purchase Russian diesel cargoes to help lower fuel prices and bolster political support. However, the agreement did little to prevent a Republican election rout, which saw Democrats gain control of both houses of Congress.
Tankers Reroute Amid Sanctions and Warnings
Two key tankers, the Talisman and the Leruo, no longer list the US Atlantic coast as their destination. The Talisman, a Russian vessel under US, UK, and EU sanctions, has moved into the Mediterranean and is now signaling “for orders,” indicating an unconfirmed destination. The Leruo, sanctioned by the UK, EU, and Canada, updated its destination signal to Brazil earlier this week.
A third vessel, the Greek-owned Agioi Fanendes, appears to be continuing towards the US but is also signaling “for orders,” suggesting its discharge port remains unconfirmed. Meanwhile, a fourth sanctioned tanker, the Beast, has sailed from Russia's Primorsk port and is currently headed towards the Atlantic.
Political Backlash and Legal Questions
The proposed deal has faced considerable criticism. New Jersey Governor Mikie Sherrill publicly warned port and terminal operators in her state against accepting Russian diesel cargoes, threatening severe penalties for non-compliance. Both Democratic and some Republican lawmakers have also questioned the legality and implications of Trump's agreement with Putin.
Analyst Matt Smith noted that two of the three cargoes initially bound for the US have already diverted. While the third is expected to reach New York over the weekend, he cautioned that it too could change course due to buyers' concerns over regulatory, legislative, and sanctions issues. The global supply crunch is further exacerbated by the loss of refinery capacity, linked to ongoing conflicts in Iran and Ukraine.