Russian refiners ramp up diesel output after Trump deal

Russian refiners are producing more diesel in October after Moscow handed out export quotas to supply the United States and other markets under a deal with President Donald Trump, two industry sources told Reuters. The increase comes as the first cargoes head across the Atlantic. Shipping analysts doubt that Russia's drone-damaged refineries can deliver all the volumes Moscow has promised.reuters.com

According to Reuters Thomson Reuters Corporation ↘ 0.89%, the sources said Russia's diesel output fell to about 160,000 metric tons per day in the first half of October, down from 175,000 tons per day in September. Production then started climbing toward 180,000 tons per day once the new export quotas came through in mid-October. Domestic demand usually drops to about 140,000 tons per day in October after the grain harvest and the summer driving season end. That leaves at least 40,000 tons per day, or more than 1 million tons a month, for export, the sources said. Between 0.2 million and 0.3 million tons of that may go to neighboring countries.reuters.com

Terms of the Deal

Trump said on October 9 that Russia would ship more than 300,000 tons of diesel right away, then 500,000 tons in November and 1 million tons after that. He said a further 3 million tons could follow, "depending on the condition of its refineries". The same day, the US Treasury issued General License 135, which allows deals involving Russian diesel, including imports into the United States, until April 7, 2027. Russia's government partly lifted its diesel export ban from October 10, allowing an initial 500,000 tons onto world markets. The industry sources expect Moscow to keep the ban in place and control exports through quotas.kommersant.ru+2

First Cargoes Sail

The tanker Agioi Fanendes loaded 40,000 tons of ultra-low sulfur diesel at the Baltic port of Primorsk on October 22. It is bound for New York and expected to arrive on November 7, according to data from LSEG London Stock Exchange Group plc. It would be the first Russian diesel delivered to the United States since July 2023. "The first oil tanker has sailed off to customers, and regular supplies will continue," said Kremlin spokesperson Dmitry Peskov. Lloyd's List Intelligence data shows two more Russian-loaded tankers headed for Norfolk and Corpus Christi.thetrucker.com+2

Capacity in Question

Repeated Ukrainian drone strikes have put pressure on Russia's refining system. Shipbroker Braemar doubts Russia can ship 250,000 barrels per day by December while up to 45% of its refining capacity is offline. Deputy Prime Minister Alexander Novak has said exports could reach 3.5 million tons a month by the end of the year. Russian diesel exports so far this year are down 41% from last year. The first 40,000-ton cargo equals about 7% of the diesel the US uses in a single day, and energy experts say the deal is unlikely to bring down prices at the pump.lloydslist.com+2