It's like moving the deck chairs around on the Titanic.
This is what Michael Lynch, a researcher at the independent American energy research institute Eprinc, says about Trump's heavily criticized agreement with Russian leader Vladimir Putin.
Russia will initially deliver 13.5 million barrels of diesel, followed by an additional 22.5 million barrels at a later stage, to the “American and global market,” according to Trump.
“If we get diesel from Russia, it effectively means that their current customers won't get it. They will then be forced to buy it from somewhere else, and that means the price will remain about where it is today,” he says.
“Can take the edge off”
The price could fall locally in the US, according to Lynch.
“But that only means that the oil is moved around, not that prices change globally or in the US as a whole,” he continues.
Russia banned diesel exports in July to meet domestic demand, which has been strained by Ukrainian attacks on Russian refineries.
If Moscow decides it is now possible to resume diesel exports, global prices could potentially stabilize, according to Daniel Sternoff of CGEP, a research center at Columbia University in New York.
“It may take the edge off prices, but it won't lower them significantly,” he says.
Moscow announced last week that it was considering reopening some export routes to avoid overproduction.
Wants to sell summer diesel
According to Clayton Seigle, an energy strategist and expert at the Washington-based think tank CSIS, Russia wants to sell off its summer diesel and make room for winter diesel that can withstand the sometimes arctic cold in the country.
Russia is therefore the big winner of the agreement, he believes.
“I don't think it's enough to lead to an actual reduction in prices in the US or Europe, but it means Moscow can secure its revenues,” Seigle says.
Rising fuel prices in the wake of the war in Iran have become a hot political issue ahead of the midterm elections in the United States. Diesel prices in particular have skyrocketed. On Friday, the average price in the United States was $6.28 per gallon. At the same time last year, it was $3.68 per gallon.
