On August 15, 2025, U.S. President Donald Trump (Republican) welcomes Russian President Vladimir Putin upon his arrival at Joint Base Elmendorf-Richardson in Anchorage, Alaska.
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U.S. President Donald Trump’s recent geopolitical consensus-building efforts to ease diesel shortages ahead of November’s midterm elections are unlikely to have an impact on prices, analysts said.
President Trump’s declaration of an “energy ceasefire” between Russia and Ukraine on Sunday surprised policymakers in Kiev and around the world, triggering a drop in oil prices on Monday despite Russia attacking a power plant shortly after the announcement. After that, oil prices rose.
The president’s declaration came after Russia announced an agreement to release 300,000 tons to the U.S. and global markets immediately, followed by another 500,000 tons in November and 1 million tons later. President Trump said Russia would then deliver an additional 3 million tons of diesel depending on the situation at Russian refineries.
President Trump has sought to curb inflation ahead of November’s midterm congressional elections, where Republicans are at risk of losing both houses of Congress.
According to the Pew Research Center, 84% of registered voters say the economy is “very important” to their vote.
Oil prices fell on Monday as supply expectations improved
According to AAA, diesel prices hit a record high of $6.5276 per gallon on average in late September as wars in Ukraine and the Middle East hit supplies hard.
“President Trump is exploring all avenues to lower diesel prices before the midterm elections,” Mohit Kumar, chief European economist at Jefferies, said in a note on Monday.
He added: “The deal with Russia has drawn opposition both within the United States and from European leaders, as it would circumvent Russian sanctions that are in place.”
“Increasing diesel supplies… would relieve some pressure on diesel prices, but the volumes agreed are unlikely to make much of a difference.”
Russia’s ‘mysterious’ diesel supply
The U.S. Treasury Department has issued an interim authorization to ease sanctions on Russian diesel in furtherance of the deal announced by President Trump on Friday.
Analysts at Lombard Odier said in a note on Monday that the deal, along with China’s plans to resume exports of refined fuels, is “potentially significant as diesel shortages amplify the inflationary effects of disruptions in energy supplies, particularly through transportation, agriculture and industrial production.”
But they warned that “shipments announced do not equate to supplies delivered” and that “neither agreement will immediately restore damaged infrastructure or normalize maritime transport.”
Neil Atkinson, former head of oil at the International Energy Agency, was less optimistic, telling CNBC: “It’s a mystery where the supplies for the Trump deal will come from. Unless it comes from domestic supplies, the Russian economy will be paralyzed.”
Atkinson said the G7 recently approved the release of 50 million barrels of petroleum products, mostly diesel, but “does little change to the underlying diesel market tightness” due to uncertainty over how much, when and where it will be released.
“The same could be said of the new U.S.-Russia agreement that allows exports from Russia,” he said. “Even if the first 300 kt (about 70 kb/d in a month) were available tomorrow, there would be little impact.
“The reason there is no impact is because the United States uses 3.7 million barrels of diesel per day. The world uses 29 million barrels of diesel per day. The United States has commercial diesel inventories of 105 million barrels,” Atkinson added.
“Before the war, nearly 1 million barrels of diesel per day were exported from the Middle East and the Gulf. Most of that is still lost due to damage to refineries and difficulties in exporting the product by ship.”
Dealing with “economic failure” and encouraging Putin
Analysts at Singapore’s Quantum Strategy Ltd. outlined a particularly pessimistic outcome in a note to clients on Monday.
“We expect this trade to fail economically. We remain long distillates and crude oil. We remain short US assets,” they wrote.
“We expect President Putin to interpret this agreement as an open invitation to escalate the gray zone war in Europe to a higher level. The impact will be negative for the euro and EU bonds as European powers scramble to ensure their own defense.”
