Russian diesel shipments to US stalled amid sanctions concerns

Four tankers carrying diesel were dispatched following the deal. According to marine analytics firm Kpler and vessel-tracking site MarineTraffic, two have rerouted to Brazil and the Mediterranean, while a third, currently in the North Atlantic, is now listed as “for orders.” A fourth tanker, the Seychelles-owned Beast, is reportedly headed towards the US.

On October 9, Trump announced the agreement, stating Russia would make over 300,000 tonnes of diesel available, followed by 500,000 tonnes in November and another 1 million tonnes afterward. The agreement, valid until April 7, reversed a previous US ban on Russian energy imports implemented after Russia’s full-scale invasion of Ukraine in February 2022. It followed Trump’s claim that Ukraine was responsible for diesel shortages by targeting Russian energy facilities.

The US Treasury issued a temporary sanctions exemption, a move that has drawn criticism from US lawmakers who passed a sanctions package in September. The Treasury maintains the exemption is legally compliant.

While the initial shipment was intended to provide relief to US consumers, analysts suggest it would be insufficient, with US retail diesel prices exceeding $6 a gallon – nearly double pre-war levels. Aarathi Krishnan, CEO of Raksha Intelligence, stated the first shipment represents “roughly two hours of US distillate consumption.”

Traders are hesitant to purchase the Russian diesel due to lingering legal risks. Despite the Treasury’s exemption, Congress’s ban on Russian energy imports remains in place. New Jersey Governor Mikie Sherrill has urged port and terminal operators to deny entry to ships carrying the fuel, warning of potential penalties. Lawmakers have also cautioned banks, port authorities, and fuel distributors against handling the imports, citing potential civil and criminal liability.

Experts believe the diverted tankers will likely be directed to Brazil and the Mediterranean. Moscow insists the deal remains on track, with Kremlin spokesman Dmitry Peskov claiming “all the diesel will find its buyers.” Putin’s special envoy, Kirill Dmitriev, has dismissed reports of diverted tankers as “fake” on X.