Russia’s Planned Diesel Release Is Unlikely to Ease Prices

what happened

Dow Jones Newswires reports that Donald Trump’s announcement of a planned Russian release of 4.8 million tons of diesel is unlikely to have a major effect on prices. Jefferies strategist Mohit Kumar said the move was “unlikely to make a substantial difference.” Based on the U.S. Energy Information Administration’s rate of 7.46 barrels of middle-distillate fuel per metric ton, the announced quantity amounts to about 35.8 million barrels. Trump did not say whether he meant metric tons or U.S. short tons, which are slightly smaller, so the calculation uses the international benchmark.

The U.S. consumed about 3.8 million barrels of distillate fuel oil a day this year, according to the EIA, with diesel accounting for most of that total. The full Russian release would therefore cover just over nine days of U.S. demand. The first tranche, however, is set at only 300,000 tons, equivalent to 2.24 million barrels. Ukrainian strikes on Russian fuel infrastructure have reduced the country’s refining capacity and led Moscow to prohibit exports in July. Russia exported roughly 900,000 barrels of diesel per day last year, Vortexa data show.

Another 500,000 tons are due in November, followed by 1 million “immediately thereafter,” Trump said. The remaining 3 million tons are to be delivered “within a short period of time,” depending on refinery conditions. The U.S. would not receive all of the fuel in any case: The International Energy Agency estimates that global diesel and fuel-oil consumption normally represents about 30% of total oil demand, or well above 30 million barrels a day. The report is part of a Wall Street Journal live-coverage event, available by searching P/WSJL.

why it matters

The figures indicate that the proposed release would represent only a limited share of global middle-distillate demand. Staged deliveries and damage to Russian refineries further constrain the near-term supply effect.

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