The diesel deal that American President Donald Trump made with Russia last week drew fierce criticism both domestically and internationally. What does the deal actually yield for Russia? And how does the deal relate to the EU, which still imports Russian gas?
Russia will immediately bring 300,000 tons of diesel to the world market. This can rise to 4.8 million tons by April next year. To arrange this, Trump has lifted sanctions that he himself imposed less than a month ago. Countries that bought Russian oil and gas risked high American import tariffs. That is now off the table.
In other words: because of this reversal by Trump, Russia can sell its diesel much more easily on the world market. For clarity: that diesel does not necessarily go to the US. "The US has enough diesel and also exports it," says Lucia van Geuns, energy expert at the The Hague Centre for Strategic Studies. "By bringing more diesel to the world market, Trump hopes the price will go down."
Immediately after the news, the diesel price did indeed drop slightly, but the spectacular decline Trump had predicted did not materialize. The amount of extra diesel coming to the market is too low for that, says Van Geuns. "This deal is mainly for show; an attempt to reassure voters ahead of the congressional elections."
Middle East War
The main cause of the high diesel price remains: the ongoing blockade of the Strait of Hormuz. "Hardly any oil products or crude oil still pass through that sea passage and as long as that does not change, fuel prices will remain high."
Moreover, it is very questionable whether Russia is even able to export the announced quantities of diesel. Ukraine has recently inflicted considerable damage on Russian oil refineries. As a result, there is also a large diesel shortage within Russia itself.
Within American politics, the deal with Russia has been met with outrage. Senators, including members of Trump's own party, write in a statement that the US is thereby financing the Russian war against Ukraine.
How much Russia can precisely earn from the deal is difficult to say. According to news agency Reuters, the first 300,000 tons of diesel bring the Russian economy about 400 million dollars. If Russia manages to export 4.8 million tons, that would yield about 6.4 billion dollars at current market prices, around 5.7 billion euros.
The amount that actually reaches the Russian state is much lower, says Van Geuns. "Russia mainly taxes oil production, not the export of fuel products like diesel. The largest part goes to the refineries and traders."
Europe and the United Kingdom will not buy Russian diesel, but countries like Turkey and India can. Those countries no longer have to fear American sanctions. "Indirectly, Trump is indeed filling the Russian state coffers here."
Russian gas to Europe
Concerned reactions also came from Europe this week. According to the EU foreign ministers, the deal undermines transatlantic unity. Trump calls this reaction "hypocritical" because the EU still imports large amounts of Russian gas.
Since the Russian invasion of Ukraine, the EU has almost completely stopped importing Russian oil and drastically reduced imports of Russian gas. Yet the EU remains the largest buyer of Russian gas. According to research organization CREA, the EU imported over 12 billion euros worth of Russian energy in the first eight months of this year.
The reason the gas tap from Russia has not yet been fully turned off is the strong European dependence on imported gas. In addition, European energy companies were initially tied to long-term contracts with Russian companies. "Since the end of last year, they can legally get out of those more easily, but that is happening only gradually."
An important criticism of Trump's diesel deal is that it contradicts recent agreements with the EU to accelerate the end of imports of Russian fossil fuels. Notably under pressure from Trump, Commission President Ursula Von der Leyen promised last month to completely stop importing Russian liquefied gas by 2027.
"Yes, the EU still imports Russian gas and yes, that is a political choice," says Van Geuns. "But the phase-out is indeed in full swing. For Trump, it is not about energy security, but purely a symbolic gesture to his voters. And Putin is the third who laughs, because it fills his economy."