Russia boosts diesel output for US exports

Russian oil processors boosted diesel manufacturing in October following the Kremlin’s allocation of export limits as part of a deal with Washington, industry contacts confirmed to Reuters on Monday.

Output averaged roughly 160,000 metric tons daily during the month’s first half, down from September’s 175,000 tons, but surged toward 180,000 tons per day after mid-October when quotas were implemented.

Domestic demand for diesel in Russia usually declines to approximately 140,000 tons daily in October, sources noted, as harvest season concludes and summer road traffic wanes. This leaves surplus capacity of at least 40,000 tons available for overseas sales each day.

Of that surplus, between 200,000 and 300,000 tons are expected to flow to neighboring nations under bilateral trade terms. Moscow has maintained its August diesel export restrictions but will now manage outbound volumes through quota systems.

U.S. President Donald Trump announced on October 9 that Russia would dispatch over 300,000 tons of diesel immediately, followed by 500,000 tons in November and 1 million tons thereafter. The U.S. Treasury granted a six-month exemption to sanctions on Russian fuel that same day, permitting the trade.

This waiver extends beyond pre-election price reductions and is interpreted by some experts as an initial move toward broader sanctions relief on Russian energy exports, potentially redirecting supplies from China back to Western markets. China’s reliance on Russian fuel has grown since Gulf oil flows were disrupted by the Hormuz closure.

The first shipment, loaded onto the Malta-registered Agioi Fanendes, departed Primorsk on October 23 carrying roughly 40,000 tons of ultra-low sulfur diesel, with arrival in New York scheduled for November 7, just four days after the U.S. midterm elections.

On that date, U.S. diesel prices averaged $6.32 per gallon, up from $3.63 in the prior year. Kremlin spokesman Dmitry Peskov stated that deliveries to America would proceed on a consistent basis.

Separate tankers carrying Russian diesel have since indicated routes to Turkey and Brazil. However, Standard Chartered Bank cautions that Russia faces short-term challenges in expanding output, as Ukrainian drone attacks have damaged refineries, repairs for which could take months. The bank further notes that barrels sent to U.S. buyers reduce supply available to Russia’s traditional customers.

Kyiv resumed airstrikes on refineries on October 15, ending a three-day pause, which threatens the recovery of October’s production gains.