Russia and Germany are putting more diesel into a global market that has spent months looking for barrels almost anywhere it can find them.
President Donald Trump said Friday that Russian President Vladimir Putin had agreed to immediately supply more than 300,000 metric tons of diesel to the U.S. and global market, followed by another 500,000 tons in November and 1 million tons after that.
The first three tranches amount to roughly 13 million barrels of diesel. Trump said Russia could subsequently supply another 3 million tons, depending on the condition of its refineries.
Russia has kept diesel exports largely shut for months as Ukrainian attacks reduced refinery output and Moscow prioritized its domestic fuel market. Any return of Russian barrels would therefore restore supply that has been conspicuously absent during the global diesel crunch.
Oil prices moved lower after Trump’s announcement, with WTI dropping to around $91 per barrel Friday afternoon.
Europe is opening its emergency tanks, too.
Germany will release as much as 15 million barrels of diesel, heating oil and crude from strategic reserves, Economy Minister Katherina Reiche said Friday. Diesel and heating oil will move first, followed by crude.
Germany’s release is part of the International Energy Agency’s accelerated draw from emergency stocks announced this week. The IEA says roughly 100 million barrels remain to be released from the 400-million-barrel program launched after the Iran war disrupted Middle Eastern supply.
France has committed another 10 million barrels of diesel, and Italy says it has already completed its 10-million-barrel commitment.
Germany and France alone are now putting 25 million barrels into the release effort.
The new Russian supply attacks the shortage from the other direction: actual refinery output rather than inventories.
Neither volume is large enough to repair the global fuel market by itself. Together, though, Russian exports and European stock releases give diesel buyers something they have had very little of this year: additional barrels arriving from more than one direction.
By Julianne Geiger for Oilprice.com
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