Trump and Putin's diesel deal is unlikely to lower prices, as Russia lacks enough fuel for exports

Trump and Putin's diesel deal is unlikely to lower prices, as Russia lacks enough fuel for exports — Reuters

Donald Trump's agreement with the Kremlin on supplying diesel fuel to the global market is unlikely to significantly reduce prices, Reuters analysts and market participants believe. The promised supply volumes are too small, and Russia cannot increase production because of Ukrainian attacks.

According to Trump, Russia will immediately put 300,000 tonnes of diesel (2.25 million barrels) on the market, another 500,000 tonnes in November, and one million tonnes “immediately after that.” If the first shipment is spread over a month, that amounts to about 73,000 barrels a day.

Experts warn that this is not enough to noticeably reduce prices. According to the analytics firm Kpler, at least 400,000 barrels of diesel per day are needed. At consulting firm Baringa, the minimum volume of additional supplies is estimated even higher — at 850,000 barrels.

Russia would need to additionally produce between 384,000 and 509,000 barrels of diesel per day, the Energy Policy Research Foundation calculated. The country currently produces around 1.4 million barrels of diesel fuel a day, of which about 1.2 million barrels are consumed domestically, leaving only a small surplus available for export.

@meduzalive