TLDR
Donald Trump announced a deal with Vladimir Putin to release up to 4.8 million tonnes of Russian diesel onto global markets, with the US Treasury immediately issuing a sanctions waiver running to April 2027. Ukrainian President Volodymyr Zelensky condemned the move as unfair and dishonest.
Deal terms: volumes, timeline and the Treasury licence
President Donald Trump announced on 9 October 2026 that he had concluded a deal with Russian President Vladimir Putin to release Russian diesel onto American and global markets across four tranches totalling up to 4.8 million tonnes.[1] The US Treasury's Office of Foreign Assets Control followed within hours, issuing Russia-related General License 135 to give the arrangement legal effect.[2]
Trump posted the terms on Truth Social, writing: "I have just concluded a highly successful discussion with President Vladimir Putin, of Russia, wherein 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. Additionally, 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."[1]
General License 135 authorises the sale, delivery, offloading and importation of diesel fuel of Russian Federation origin through 12:01 a.m. eastern daylight time on 7 April 2027.[2] The licence covers the full commercial chain from sale through to final delivery, removing the principal legal barriers that had prevented American firms from contracting Russian refined fuel.
US diesel at record levels ahead of midterms
US on-highway diesel averaged US$6.199 per gallon for the week ending 5 October 2026, the highest figure on record according to the US Energy Information Administration.[3] That spike placed severe cost pressure on agriculture, trucking and logistics industries in the weeks before the 3 November midterm elections.
Diesel prices carry outsized political weight because they flow directly into freight, farm machinery and food distribution costs. At US$6.199 per gallon, haulage operators and farmers faced input cost increases that rapidly translated into higher consumer prices across the supply chain.[3]
Trump moved quickly on energy prices, and the same-day Treasury licence underlines how closely the announcement was coordinated across the executive branch. The Biden administration had previously eased similar Russian energy restrictions under separate general licences to address supply disruptions during earlier Middle East tensions, establishing procedural precedent for this type of action.
Russia's export ban and the drone-strike backdrop
The Russian diesel now being released to global markets had been locked behind a domestic export ban for more than two months. The Government of the Russian Federation issued Resolution No. 954 on 30 July 2026, imposing a temporary ban on diesel and other petroleum product exports in response to Ukrainian drone strikes that disabled key distillation units at multiple refineries.[4]
Resolution No. 954 preserved only narrow humanitarian and intergovernmental exemptions, effectively removing Russian diesel from global trade from late July. Combined with existing US and allied sanctions, that ban tightened refined fuel markets considerably, contributing to the price surge tracked by the Energy Information Administration through early October.[3]
Ukrainian drone strikes on Russian refining infrastructure have been a recurring feature of the broader conflict since 2022. Moscow chose to respond with an export ban rather than only operational repairs, effectively weaponising its refining capacity as a secondary pressure point in global energy markets.
Zelensky's condemnation
Ukrainian President Volodymyr Zelensky condemned the arrangement on 9 October 2026. In a phone interview, Zelensky said: "President Trump's decision to unilaterally lift sanctions on Russia and allow it to export diesel was not fair and not honest."[5]
Zelensky's use of the word "unilaterally" goes to the core of Kyiv's objection. Ukraine and its European partners have maintained that sanctions on Russia must be lifted only as part of a negotiated settlement that includes verifiable Russian withdrawal and security guarantees, and the Trump administration's move bypassed that framework entirely.[5]
Zelensky warned the decision strengthens Moscow's hand at a moment when Russian forces remain in Ukrainian territory. The verified research bundle does not include specific statements from European governments, and no such reactions are attributed here.
What the deal means for global diesel supply and Australian fuel prices
The immediate tranche of 300,000 tonnes is modest against global daily consumption, though the signal effect on futures markets is likely to exceed the physical volume.[1] Diesel trades globally, and price movements in the US benchmark carry through to Asian and Pacific markets, including Australian retail fuel prices, typically within weeks.
Australia imports a substantial share of its refined diesel, making domestic pump prices sensitive to international benchmark shifts. A sustained fall in US diesel from record levels would feed through to Singapore gasoil prices, the primary reference for Australian fuel suppliers, with the trajectory depending on how quickly Russian cargoes can be shipped, contracted and delivered against the April 2027 licence window.[4]
The full 4.8 million tonne commitment, if delivered, would represent a significant reintroduction of Russian refined product to a market that had largely excluded it since 2022. General License 135 runs until 7 April 2027, giving counterparties a window of almost six months to execute contracts under the US sanctions waiver.[2]
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FREQUENTLY ASKED QUESTIONS
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Important
This article discusses commodity price movements and their potential flow-through to consumer prices. It is general information only and does not constitute financial advice. Readers should not rely on price forecasts or supply chain impacts as a basis for purchasing, investment or hedging decisions. Consult a licensed financial adviser for advice tailored to your circumstances.
