The Other Side of the Trade: Russian Diesel in the US
02/11/2026
The body we inhabit is largely the product of our last 600 meals.
Many of the world's crises, likewise, are the consequence of 600 cans kicked down the proverbial road.
And our opinions? The product of 600 conversations and interactions, with the most recent often carrying disproportionate weight.
One might reasonably wonder whose voices have been carrying the greatest weight in Washington of late, as several tankers reportedly carrying Russian diesel approach the eastern seaboard of the United States, their ownership and transactional status apparently in a state of political-commercial flux.
Elevated diesel prices have become increasingly uncomfortable for governments and consumers alike, particularly in the US ahead of November's midterm elections. The Trump administration sought a political solution, reaching an agreement with Russia on 9 October and issuing a temporary licence intended to remove some of the obstacles to purchasing Russian diesel.
But markets have an inconvenient habit of moving on while politicians are still constructing a narrative to suit their preferred solution.
Diesel cracks have come under pressure, with the December ICE gasoil/Brent spread retreating to around $70/bbl from a September high approaching $88/bbl, while the equivalent US heating oil/WTI crack has fallen from an October high above $108/bbl to around $90/bbl. China is resuming refined-product exports and South Korea is preparing to relax diesel export restrictions from November, while some freight pressures also appear to be easing.
For any prospective buyer, the potential trading margin must now compensate for political, legal and reputational risks that may be increasing just as alternative supplies become more readily available.
The US authorisation does not override European or British sanctions restrictions, while its compatibility with existing US legislation is being challenged. For an internationally active commodity merchant, future investigations or commercial exclusion could threaten relationships with financial institutions, insurers and counterparties worth considerably more than the profit on a handful of cargoes.
One vessel, Agioi Fanendes, initially signalled New York before changing to for orders. Not necessarily evidence of an unsold cargo, but hardly confirmation of an eager American buyer either.
Meanwhile, members of Congress are questioning the legality of the imports and seeking information about the commercial parties involved.
There is a certain irony in the possibility that Russian diesel, having been invited into the US market by Washington, might end up undergoing a discreet ship-to-ship transfer just outside American waters.
Such an arrangement could allow a different vessel, and potentially different commercial interests, to undertake the final delivery, creating some distance between the original cargo participants and the immediate US import transaction, without necessarily obscuring the underlying documentary trail.
The parallel with clandestine transfers of Iranian crude and condensate by shadow-fleet operators in the Persian Gulf and Gulf of Oman would be difficult to overlook.
There is no evidence that such a transfer is planned, and it would not extinguish the underlying documentation or legal obligations.
Around 600 days ago, Donald Trump was threatening additional sanctions and tariffs on Russia, while the release of the Epstein files had recently returned to the headlines.
The headlines, like the conversations they inspire, have moved on.
It is one thing for governments to authorise trades, increasingly quite another to persuade someone to take the other side. And this is a reality likely to extend well beyond 'just' energy molecules.
~600 days ago prices looked a little different
(Source: Bloomberg)
References
US Treasury / OFAC, 9 October 2026. General Licence 135, Authorizing Transactions Related to the Sale, Delivery, Offloading, and Importation of Diesel Fuel of Russian Federation Origin. OFAC announcement.
Reuters, 23 October 2026. Reporting on the Agioi Fanendes, its Russian diesel cargo and intended US voyage. Reuters report.
S&P Global Commodity Insights, 23 October 2026. Russian diesel tanker heads to New York as Kremlin claims regular shipments. S&P Global report.
US Senate, 27 October 2026. Senator Richard Blumenthal's correspondence challenging the legality of Russian diesel imports and requesting information about the shipping and commercial parties involved. Senate statement and correspondence.
Financial Times, 29 October 2026. New Jersey governor threatens to block delivery of Russian diesel cargoes. Reporting on the vessels, political opposition and limited commercial interest despite discounted cargoes. Financial Times report.
Reuters, 9 October 2026. China to resume October fuel exports after holiday pause, sources say. Reuters report.
Yonhap News Agency, 29 October 2026. S. Korea to conditionally ease diesel export restrictions amid stable crude supplies. Yonhap report.
Market data: Bloomberg, December 2026 ICE gasoil/Brent and NYMEX heating oil/WTI crack spreads, observations through 29–30 October 2026.
The discussion of a possible ship-to-ship transfer is a hypothetical commercial scenario, not a report of an intended transaction.
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