Why is Donald Trump buying diesel from Vladimir Putin's Russia despite heavy sanctions? What will be impact on Oil prices?

President Donald Trump said he has struck a deal to obtain diesel from Russia, a stunning reversal of years of U.S. pressure on Moscow over its war with Ukraine and an attempt to address high fuel prices ahead of the U.S. midterm elections. The U.S. has not imported Russian oil or gas since 2022, when the Biden administration banned the imports because of Moscow’s invasion of Ukraine, according to the U.S. Energy Information Administration.

Trump said on social media on Friday that he struck the deal with Russian President Vladimir Putin in a phone call in which he was expected to discuss a suspected case of plague in Russia. Instead, Trump announced that Russia will immediately supply more than 300,000 tons of diesel, followed by an additional 500,000 tons in November and 1 million tons “immediately thereafter.” Russia will deliver an additional 3 million tons “within a short period of time” after that, he wrote.

Trump’s shocking announcement comes after he signed a sweeping Russia sanctions law last month that aimed at clamping down on the Russian oil and gas revenues that fuel its war against Ukraine.


The law Trump signed last month envisions sanctions on Russian officials, banks and a shadow fleet of tankers and bans all new U.S. investment in Russia and the handling of sovereign debt.

It also directed Trump to impose tariffs of up to 100 per cent on the top five importers of Russian oil or natural gas, with an exception for countries that import less than 15 per cent of Russia’s natural gas exports and have taken significant steps to reduce those imports.

Diesel Prices ahead of November 3 Midterm Elections

Trump did not address the sanctions or Russia’s war but said, “Lower prices for Americans, especially our Great Farmers, Ranchers, and Truckers, is my Greatest Priority.”

Trump said later as he left the White House for a campaign rally that he was thankful for the deal. "I want to thank President Putin. To be honest with you, we have massive amounts of oil coming into our country, and it’s diesel, which is what we want. So, thank you," Trump said. He did not answer shouted questions about the criticism from Zelenskyy.

The White House did not immediately respond to questions about who was paying for the Russian diesel or when it would become available.

Gas prices globally have surged as the war in Iran upends the energy sector. While diesel future prices dipped on the news on Friday, the national average for a gallon of diesel in the U.S. remained high at $6.28, according to AAA, after hitting a record $6.52 on Sept. 22.

A statement from Putin, released by the Kremlin on Friday, said during their call he and Trump dedicated “significant attention to the prospects of resolving the Ukrainian crisis” and also discussed “the situation around Iran and various aspects of bilateral relations.”

Russia “confirmed its readiness to supply oil and oil products to the American and global markets,” Putin said. “I am confident that this will have a positive impact on the entire global economy.”

Russian presidential aide Yuri Ushakov, speaking later to reporters, wouldn't say whether the U.S. made any concessions in exchange for the supplies, or what, if anything, was promised to Russia in exchange.

Impact on Oil Prices

Shortly after Trump made the announcement, the Treasury Department said it was immediately issuing a temporary license allowing Russian diesel to be supplied to the global market. This is the latest license the U.S. Treasury has issued regarding Russian fuel shipments since the start of the Iran war early this year. But it is the first to ease sanctions on diesel for a period lasting longer than the standard 30-day window since the start of the Ukraine war in February 2022.

The new so-called general license means U.S. sanctions will not apply until April 2027 on deliveries of Russian diesel that has been loaded onto tankers as of Friday. The department extended similar easing of sanctions in March and April even though Treasury Secretary Scott Bessent had ruled out such a move earlier in the year.

"What does this do to prices? I think probably not much,” said Clayton Seigle, an energy strategist and expert at the Center for Strategic and International Studies.

But, Seigle said the new deal is a “great benefit to Russia and to Putin,” who are currently trying to offload their summer-grade diesel for the heavier winter and arctic grades that they will need in the coming months.

“It’s kind of shuffling deck chairs on the Titanic,” said Michael Lynch of the Energy Policy Research Foundation, a non-partisan research institution focused on energy and economics.

“If we get diesel from Russia, basically it means that their existing customers are not going to get it and they’ll have to go somewhere else, and that will keep the price basically where it is now,” Lynch said.

Russia, once a major exporter of diesel, has banned exports since July as it has struggled to meet demand inside the country because of Ukraine’s repeated attacks on Russian oil refineries. The International Energy Agency says Russian diesel output has fallen by about 30 per cent.

Russian Deputy Prime Minister Alexander Novak told state news agency Tass that Russia is “immediately starting to lift restrictions on diesel exports ahead of schedule.” He said Moscow could start supplies to the U.S. this month and Russia’s domestic market will be “fully supplied” with diesel, as well.