Trump’s Russian Diesel Deal May Cut Prices by Just $1-$2 Per Barrel, Says Goldman Sachs; Cover Only 10 Days of US Demand
President Donald Trump’s proposed diesel agreement with Russia may do little to reduce fuel costs for U.S. truckers and farmers, according to experts.
Goldman Sachs Group Inc. (NYSE:GS) estimated that Russian diesel shipments scheduled for October and November could reduce wholesale prices by only $1 to $2 per barrel on the U.S. Gulf Coast and in Europe, CNBC reported on Tuesday.
Trump said Russia would immediately supply 300,000 metric tons of diesel to global markets, equivalent to about 2.24 million barrels or 74,500 barrels per day if spread over a month, the publication noted using the S&P Global Platts benchmark.
According to the President, Russia would ship another 500,000 tons (3.73 million barrels) in November, followed by 1 million tons (7.45 million barrels). An additional 3 million tons (22.35 million barrels) will be supplied later, depending on the condition of Russia’s refineries.
If carried out as announced, the agreement would release 4.8 million metric tons, equivalent to 35.76 million barrels, into the market. That amount covers approximately 10 days of U.S. domestic demand and slightly more than one day of worldwide consumption, the report added.
The proposed volume equals about 2% of U.S. demand, the Energy Information Administration (EIA) said, adding that domestic consumption reached 3.65 million barrels per day during the week ended Oct. 2. Global consumption exceeds 28 million barrels daily, according to the International Energy Agency, placing the planned release below 1% of worldwide demand.
"It does not even touch the sides — it is very, very small," Neil Atkinson, former head of the IEA’s oil industry and markets division, told CNBC’s "Squawk Box Europe" on Monday.
Russia Deal Sparks Bipartisan Ire
Trump’s proposed Russia arrangement has already triggered resistance in Washington. On Oct. 11, a bipartisan group of senators, including Senators Susan Collins (R-Maine), Jeanne Shaheen (D-N.H.), Richard Blumenthal (D-Conn.), Lisa Murkowski (R-Alaska), Ron Wyden (D-Ore.), Thom Tillis (R-N.C.) and John Curtis (R-Utah), called for reversing the deal.
The senators argued that Congress banned Russian energy imports in 2022 to prevent American dollars from financing Vladimir Putin’s war against Ukraine, saying the agreement "runs directly counter to that law."
However, Rep. Thomas Massie (R-Ky.) supported Trump’s position, saying his 2022 opposition to Russia sanctions reflected concerns that Americans would face higher prices. Massie also urged lifting sanctions on petroleum products and raw metals.
Diesel Prices May Take A Year To Ease
Despite producing more diesel than it consumes, the U.S. faces high prices because supply is concentrated on the Gulf Coast, while East and West Coast markets lack affordable transportation links. University of Washington professor Phillip Bruner told Benzinga that congested pipelines, the absence of a pipeline to the West Coast, and costly shipping requirements under U.S. law are amplifying the issue. He also pointed to a global refinery shortage amid ongoing conflicts.
A Dallas Fed survey of 100 U.S. oil and gas companies found that 48% of executives expect diesel prices to take more than four quarters to return to 2025 levels, compared with 36% who expect the same for gasoline.
Diesel averaged $6.2787 a gallon on Wednesday, according to AAA, down from $6.3015 a week earlier but still about 71% above the $3.6574 a year ago.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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