Five things to watch after Trump's Russian diesel deal
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President Trump is turning to Vladimir Putin to help ease a global diesel crunch, setting up a clash between Washington's energy priorities and its efforts to pressure Russia over its invasion of Ukraine.
Why it matters: The fuel shortage is among the most severe effects of the Iran war and Ukrainian strikes on Russian refineries.
- Average U.S. diesel prices remain far above $6 per gallon, adding to GOP headwinds in the midterm elections. Trump says his deal will help bring costs down.
Catch up quick: Trump on Friday claimed an agreement to bring escalating Russian exports, and the Treasury Department waived sanctions to help enable it.
A few things to watch...
The campaign trail. So far a few Republicans in close races — including Michigan Senate candidate Mike Rogers and Alaska Sen. Dan Sullivan — have criticized the agreement.
- Republicans already saddled with Trump's unpopular policies in the midterms now face another awkward choice: whether to back his diesel deal with a dictator many of them despise, Axios' Andrew Pantazi writes.
The market. Diesel futures dipped after the announcement. But analysts expressed doubt that the levels Trump is claiming will meaningfully sway prices in the U.S. and elsewhere — if Russia indeed delivers.
- Per Trump's claim, Russia will "immediately" provide what amounts to 2.24 million barrels, followed 3.73 million next month (equivalent to around 124,000 barrels per day spread over a month), and then roughly double it thereafter.
- "In the near-term, it's hard to see the waiver helping global fundamentals for diesel much," writes economics and geopolitics analyst Rachel Ziemba.
- The global market currently has a deficit of about 1 million barrels per day, per market intel firm Kpler, and "Russia's ability to deliver additional barrels remains uncertain," writes Kpler's Michelle Brouhard.
Capitol Hill. Rep. Brian Fitzpatrick (R-Pa.), one of those lawmakers in a close reelection fight, will try and force a House vote to block Russian oil purchases.
The law. It's not clear if any Russian barrels will reach U.S. shores — or whether it's legal if they do.
- A bipartisan group of seven senators, in a statement, say the decision runs afoul of a 2022 law barring U.S. imports of Russian oil and petroleum products. Treasury's Office of Terrorism and Financial Intelligence said it is acting "in compliance with all applicable laws."
- Meanwhile, the White House faces an Oct. 18 deadline to begin implementing a more recent law — named after the late Sen. Lindsey Graham — that imposes fresh sanctions on Russia and trade penalties on buyers of Russian energy. But the law gives the White House discretion to waive key provisions.
Ukraine. Trump is pushing Ukraine and Russia to ease attacks on energy infrastructure.
- Ukrainian President Volodymyr Zelenskyy, who has criticized Trump's deal, said Russia has continued its barrages even as he maintained Ukraine held back early this week.
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