Trump’s diesel deal offers little price relief deal ahead of midterms
U.S. President Donald Trump (R) greets Russian President Vladimir Putin as he arrives at Joint Base Elmendorf-Richardson on August 15, 2025 in Anchorage, Alaska.
Andrew Harnik | Getty Images
U.S. President Donald Trump‘s latest geopolitical dealmaking effort to ease a diesel supply crunch ahead of November’s midterm elections is unlikely to make a dent in prices, according to analysts.
Trump’s declaration of an “energy ceasefire” between Russia and Ukraine on Sunday surprised policymakers across the world — not least in Kyiv — and prompted oil prices to fall on Monday, despite Russia striking a power plant shortly after the announcement. Oil later rose.
The president’s declaration comes after he announced a deal for Russia to release 300,000 metric tons to the U.S. and global markets immediately, followed by another 500,000 tons in November and 1 million tons after that. Moscow will then deliver another 3 million tons of diesel based on the condition of Russia’s refineries, Trump said.
Trump has sought to tame inflation ahead of the congressional midterms in November, when his Republican Party is at risk of losing both houses.
According to the Pew Research Center, 84% of registered voters say the economy is “very important” to their vote.
Oil prices dipped Monday on improved supply hopes
Diesel prices hit a record high average of $6.5276 a gallon in late September, according to AAA, as the wars in Ukraine and the Middle East took their toll on supply.
“Trump is exploring all avenues to bring down diesel prices before the mid-terms,” Mohit Kumar, chief European economist at Jefferies, said in a note on Monday.
“The deal with Russia has drawn opposition both from within the US and from European leaders, as it would be bypassing the Russian sanctions in place,” he added.
“While more supply of diesel would … ease some pressure on diesel prices, the volumes agreed are unlikely to make a substantial difference.”
Russia’s ‘mystery’ diesel supply
The U.S. Treasury has issued a temporary license easing sanctions on Russian diesel to facilitate the deal Trump announced Friday.
Lombard Odier analysts said in a Monday note that the agreement, in addition to Chinese plans to resume refined-fuel exports, are “potentially significant because diesel shortages have amplified the inflationary consequences of disrupted energy supply, particularly through transportation, agriculture and industrial production.”
But they cautioned that “announced shipments are not equivalent to delivered supply,” and “neither agreement immediately restores damaged infrastructure or normalizes maritime transportation.”
Neil Atkinson, former head of the Oil Division at the International Energy Agency, was less optimistic, telling CNBC in a note: “Where the volumes to supply the Trump deal come from is a mystery, unless it comes from domestic supply, which will cripple the Russian economy.”
Atkinson noted that the G7 recently authorized the release of 50…
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