U.S. Weighs Easing Sanctions on Russia's Shadow Fleet: "Russian Diesel to Reach U.S. in 2-3 Weeks" (Updated)
Focus on Stabilizing Fuel Prices Ahead of the Midterms
"Unlikely to Lead to a Short-Term Increase in Supply"
The Trump Administration is considering easing sanctions on Russia's so-called "shadow fleet," a fleet of tankers involved in illegal ship-to-ship transfers. The move is a last-ditch effort after soaring diesel prices in the United States put the administration in a disadvantageous position ahead of next month's midterm elections. Russia is also expected to begin supplying diesel to the United States within two to three weeks, but analysts say this is unlikely to do much to bring prices down.
On October 15 local time, the Financial Times (FT), citing people familiar with the matter, reported that "the U.S. is considering allowing sanctioned tankers to be sold to legitimate ship operators, or lifting sanctions altogether so the vessels can operate without restrictions."
Easing sanctions on the shadow fleet could improve the capacity to transport crude oil and refined products by sea, potentially lowering tanker freight rates. This, in turn, could ease upward pressure on diesel prices in the United States. U.S. Energy Secretary Chris Wright reportedly raised the idea at the World Petroleum Congress (WPC) in Saudi Arabia on October 11.
The FT described the move as one of the Trump Administration's efforts to stabilize fuel prices ahead of the midterm elections. In the wake of the recent war with Iran, oil prices and inflation have risen, while approval ratings for President Trump and the Republican Party have continued to fall.
However, easing sanctions on the shadow fleet is not expected to bring fuel prices down in practice. Energy Aspects, an energy consultancy, said, "Most shadow fleet vessels are aging and have not been properly maintained," adding that "even if sanctions are lifted, it would be difficult to expect a meaningful increase in the capacity of the conventional shipping market in the short term."
Meanwhile, Russia has resumed diesel exports to the United States. Reuters, citing data from market intelligence firm LSEG, reported that "Russia resumed loading diesel for export at the Baltic Sea port of Primorsk on October 14." On October 13, a tanker carrying about 40,000 metric tons of ultra-low-sulfur diesel reportedly departed Russia for Morocco in Africa.
Russian Deputy Prime Minister Alexander Novak also said at the Russian Energy Week event in Moscow on October 16 that "Russian diesel will begin to be supplied to the United States within at least two to three weeks." He added, "To arrange the shipments, the contracts need to be finalized, the fuel loaded, vessels chartered, and the cargo sent to buyers. This process takes two to three weeks. We need to finalize the contracts as soon as possible."
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On October 9, U.S. President Donald Trump and Russian President Vladimir Putin agreed on a "diesel deal" to supply Russian diesel to the United States and global markets. Under the agreement, Russia lifted its export ban on 500,000 metric tons of diesel starting October 10, and the U.S. Treasury Department temporarily eased sanctions on Russian diesel through April 7, 2027.
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