U.S. President Donald Trump’s moves are raising new questions about Washington’s credibility as Kiev’s most important military partner and increasing uncertainty about whether Ukraine will be able to continue its war against Russia.
President Volodymyr Zelenskiy is in a difficult position as winter approaches, after Presidents Trump and Putin agreed to ease sanctions on Russia for supplying diesel to global markets and limits on sharing U.S. intelligence with Ukraine’s military.
Rising prices for diesel, which is essential for transporting goods and agricultural production, tend to push up costs across the economy and accelerate inflation. President Trump is under pressure to cut fuel costs as the November US midterm elections approach.
But experts told CNBC that the diesel deal would only bring small economic benefits to Russia and would not make a big difference to global energy prices. Its broader political implications could become more significant, reinforcing the Kremlin’s belief that it can secure concessions from Washington without compromising on the Ukraine issue.
“Russia’s main interests are political. President Trump’s decision eases sanctions pressure and undermines the unity of the Western countries,” Sergey Aleksashenko, senior researcher and head of economics at the NEST Center, told CNBC.
diesel trading
The agreement between President Trump and President Putin is for Russia to supply 4.8 million tons of diesel to the global market, equivalent to about 10 days of U.S. domestic demand or about 1 day of global demand. Experts say there will be little impact on prices.
“You don’t even touch the sides. It’s very small,” Neil Atkinson, former head of the IEA’s oil industries and markets division, told CNBC’s “Squawk Box Europe” on Monday.
Alexashenko estimated that the first part of the phased agreement, covering 1.8 million tons of diesel, could generate up to $1.25 billion in additional export revenue over three months, equivalent to about 1% of Russia’s primary product export revenue over the same period.
However, the benefit to Russia’s federal budget would be significantly smaller, amounting to less than $30 million per month, or less than 0.07% of monthly federal revenue.
Therefore, the deal is unlikely to meaningfully strengthen Russia’s war finances, Aleksashenko said. Rather, the main benefit for Russia was political, he told CNBC, because it eased the pressure of sanctions and weakened Western solidarity without requiring Putin to make concessions on Ukraine.
The researcher also argued that the entry of additional Russian diesel into the global market will not be enough to significantly reduce consumer fuel prices in the short term.
Referring to Russia’s 2027 budget proposal, Aleksashenko added: “Securing war funding is now President Putin’s top priority and he is ready to increase it even if it means cutting all other spending.”
The bigger problem for Ukraine is
“Rather than encouraging compromise, the (diesel) deal is likely to strengthen the Kremlin’s belief that continued pressure will ultimately lead to further concessions from the West,” Maria Snegovaya, a senior fellow at the Center for Strategic and International Studies, told CNBC.
Speaking to reporters in Brussels on Friday, President Zelensky warned that the diesel deal could set a precedent for further sanctions relief and stressed that Ukraine remains dependent on U.S. military technology and intelligence despite efforts to develop alternative fuels.
“Sanctions will be lifted once gas is supplied,” Zelenskiy said. “They will be lifted for other reasons, and this will extend to the banking system, certain individuals and the chemical industry.”
Earlier this week, there was a report saying: space x Starlink’s military application Starshield is restricted in Ukraine. SpaceX CEO Elon Musk said in a post about X that the U.S. government and president are ultimately responsible for network restrictions.
The order to restrict StarShield to Ukraine came from within the White House, Reuters reported, citing three officials familiar with the matter. CNBC has reached out to the White House for comment.
Its influence was also felt markedly in Ukraine. Starlink speed limits have been lowered, making it impossible for Ukraine to shoot down some Russian drones. Ukrainian officials said this week that Ukraine received no advance warning from its partners about an incoming ballistic missile that killed civilians.
According to Serhiy Derkach, Ukraine’s first deputy minister for reconstruction, infrastructure and transport, the Starlink restrictions have prompted Russia to step up its attacks on Ukraine.
“With the United States restricting the use of Starlink on the battlefield, Russia feels now is the time to inflict more pain and suffering on Ukraine’s civilian infrastructure,” Derkach told CNBC on Friday.
Russian authorities did not respond to multiple requests for comment from CNBC.
political blow
According to Snegovaya, the diesel deal was a political and moral blow to Ukraine and the Western coalition. He warned that the US sanctions waiver until April 2027 could boost Russian diesel exports beyond the initially announced shipments, increasing Russia’s economic benefits.
“The impact could be even more significant if the White House uses military and intelligence support to curb the Ukrainian attack,” Snegovaya said, adding that Ukraine’s attacks on Russian oil refineries have caused significant economic losses for Russia.
It added that such a move could have far greater implications for Ukraine’s efforts to undermine Russia’s war economy.
He said the diesel deal further undermines the United States’ credibility as a mediator in the eyes of Ukraine and its European allies, as it appears to increase pressure on Kiev while rewarding Russia without securing concessions.
The problem, Snegovaya said, is that achieving military autonomy between Europe and Ukraine in the short term is extremely difficult and Europe has been slow to develop the necessary capabilities.
“Almost five years after the war began, Ukraine and its European allies remain heavily dependent on the United States in critical areas such as intelligence and missile defense. These dependencies are unlikely to be overcome in the remaining years of the Trump administration,” he told CNBC.
