With less than a month left until the midterms, and with Trump's approval rating at daily all time lows largely due to record - for this time of year- gasoline and especially diesel prices - the President badly needed some good news, even if largely superficial, and he announced it late on Friday just an hour before the close when Trump posted on Truth Social that Vladimir Putin had agreed to release (a modest amount) of diesel supplies into the global market, as the administration looks to tame price hikes for the critical fuel.
Trump said on Truth Social that “it was agreed that Russia will immediately supply over 300,000 Tons of Diesel Fuel to the American and Global Marketplace, another 500,000 Tons during the month of November, and 1,000,000 Tons immediately thereafter.”
He added that then, “based on the condition of their Diesel Refineries, Russia will then deliver, within a short period of time, 3,000,000 Tons of Diesel Fuel.”
Trump claimed the releases would help lower diesel prices for US farmers, ranchers and truckers - key voting blocs ahead of November midterm elections in which costs of living, including for energy, are the dominant issue.
Maybe, but when one does the math, one has to scratch one's head: the 300K tons released in October amounts to just over 2.2 million barrels of diesel. Considering the US consumes just over 4 million barrels of diesel per day that amounts to half a day of consumption.
Extending the math for November we get 3.725 million barrels or less than a full day's consumption, and the "1,000,000 tons thereafter" is a little over 4 days of consumption. We doubt the "3,000,000 to be delivered within a short period of time" will ever happen, so in reality Putin will sell the US just over 5 days of Diesel consumption.
The market's kneejerk reaction was favorable with both US and European diesel prices sliding, helping push WTI Crude down by about a buck to $91.
Then again, once the algo reaction fades, we expect carbon-based traders to realize how negligible this "deal" actually is.
The US Treasury Department on Friday said that the Office of Foreign Assets Control is “immediately issuing a temporary general license to allow the supply of Russian diesel to the global market” which will extend until April 2027.
Last but not least, what will most likely end up happening in the real world, is that Putin will send out a diesel tanker, and once Ukraine drones it, the deal will promptly fall apart.