Why Trump’s diesel deal with Russia may not actually lower prices

President Trump’s controversial diesel deal with Russia may not actually bring down prices ahead of the midterms.

Trump announced last week that Russia would “immediately” supply 300,000 tons of diesel to the U.S. and global marketplace, with another 500,000 tons coming in November, drawing howls from Democrats and some Republicans over lifting sanctions on Moscow amid its war with Ukraine.

The president added that Russia would supply another “1,000,000 Tons immediately thereafter,” and, depending on the condition of its refineries, 3,000,000 tons in a “short period of time.”

However, the 300,000 and 500,000 figures appear not to exceed the monthly amounts that Russia is already exporting.

According to data from Kpler , Russia exported about 141,000 barrels per day in September and 178,000 barrels per day so far in October. A calculator from CME Group shows that’s 584,000 metric tons per month in September and 722,000 metric tons per month in October.

“These are the volumes that would have gone to the global market anyway without any additional effort,” said Tatiana Mitrova, global fellow at Columbia University’s Center on Global Energy Policy.

And, experts said, even if this many additional barrels were added to the market, it would be unlikely to actually make a dent in costs inside the U.S.

“The announced Russian diesel volumes are a small fraction, less than 5%, of US diesel demand over the next few months, so they should have very limited impact on US retail prices,” said Isabelle Gilks, principal analyst for retail fuels at Wood Mackenzie, in a statement shared with The Hill.

“The much bigger influence on prices is the constraint on supply. Russian exports have collapsed as Ukrainian drone attacks have taken refining capacity offline, and Middle East export routes remain disrupted. Unless the attacks stop and those routes reopen, there is little extra diesel to bring to market, just as winter demand picks up,” Gilks added.

Andy Lipow, president of consulting firm Lipow Oil Associates, expressed a similar sentiment last week, telling The Hill the figures are “quite small” compared to the 28 million barrel per day global market.

The deal comes as the Trump administration is seeking solutions to high fuel prices. Gasoline averaged about $4.33 per gallon on Wednesday, while diesel averaged $6.30, per AAA , up from $3.08 and $3.66 a year ago, respectively.

Energy prices increased by 5.2 percent from August to September and were up 20.4 percent year-over-year, according to data from the Bureau of Labor Statistics.

The high prices are turning into a massive midterm liability for Republicans as Americans increasingly disapprove of the Trump administration’s handling of the economy. The high diesel prices are also particularly hitting farmers, a constituency that has historically leaned Republican.

Trump clarified Tuesday that Russia will supply the global marketplace with diesel under the deal.

“That’s being released into the world. That’s not being released to us,” he told reporters at the White House.

But the exports will still impact the U.S. market, as the global diesel industry is interconnected.

“It’s a global market, so a problem somewhere is a problem everywhere, and it gets reflected pretty much at the pump wherever you might be located,” Max Pyziur, the director of downstream, transportation field and national gas projects at the Energy Policy Research Foundation (EPRINC), told The Hill.

Meanwhile, Trump’s deal could go beyond the short-term volumes he promised and may exceed Russia’s current volumes, something analysts said the country may not be able to deliver on.

Trump did not specify the exact timeline for the 1 million and 3 million tons. Mitrova said that if that’s per month, feasibility depends on whether Ukraine continues its attacks on Russian oil refineries.

“If Ukraine will keep pressure and will keep those attacks, then even 1 million becomes problematic,” she said.

Matthew Sawoski, the director of quantitative research at EPRINC, said Wednesday that Russia simply does not have the “refining capacity” to meet the requirements of the deal due to Ukrainian strikes on energy infrastructure.

“The amount of refined products that the Russians are producing is way down, way, way, way down, and the deal that they have signed promises an additional capacity that’s about equal to what they are exporting right now,” Sawoski told The Hill.

“We’re a net exporter here,” he added, referring to the U.S. “So it’s not like this is going to come to the market and stay here. It’s an integrated market you’re selling onto the world market, so it’s really about if [Russia] can generate additional supply, and we’re extremely skeptical that they can do that.”

Mitrova said, meanwhile, that the deal is benefitting Russian President Vladimir Putin politically.

“The way the deal is framed allows Putin to present himself as a trustable ally and very important figure for the United States,” she said, pointing to Trump saying Ukrainians should elect a new leader to replace President Volodymyr Zelensky and the administration’s threats to stop sharing intel with Kyiv.

Sawoski struck a similar tone, noting the export totals would net the Russian economy roughly $6.9 billion, with the Kremlin getting about 7 percent of that through taxes.

That government revenue would pay for a full day of Russia’s war against Ukraine, or 14,000 Shahed drones the Russian military has deployed in the conflict, Sawoski added.

Even if Russia exports the amount of diesel Trump’s deal stipulates, how that would impact prices is unclear.

Sawoski noted that Russia could simply redirect diesel to the U.S. from Brazil and Turkey, its top exporting partners.

“This would fulfill the deal on paper, but there wouldn’t actually be an impact for this because there’s still the same amount of supply that’d be going to the market,” he said, adding such a move could increase prices because of higher transportation costs associated with shipping diesel to the U.S.

“If anything, prices might even go up a little bit, very marginally,” Sawoski added.