Trump administration may let more Russian diesel onto market, energy secretary tells CNBC

watch now

The U.S. may allow more diesel fuel from Russia onto the global market depending on Moscow's behavior, Energy Secretary Chris Wright told CNBC in an interview Tuesday.

Wright framed the Trump administration's suspension of U.S. sanctions against Russian diesel exports earlier this month as "an incentive" for Moscow to end the war in Ukraine. It will help with fuel supplies on the margin, he said.

The Russian-flagged tanker Talisman is expected to arrive on the U.S. East Coast on Nov. 9, according to the ship-tracking platform MarineTraffic. Another tanker, the Leruo, has departed Russia en route to the "Atlantic Coast" without explicitly declaring its destination as the U.S.

More tankers with Russian diesel could "quite possibly" set sail under the U.S. sanctions waiver, Wright told CNBC's Power Lunch. "It's trying to put a carrot in front of Russia," the energy secretary said.

President Donald Trump struck a deal with President Vladimir Putin for Russia to export 800,000 metric tons of diesel in October and November, followed by another million tons.

Trump reached the agreement with Putin as he faces political pressure to reduce surging diesel prices ahead of the U.S. midterm elections next Tuesday. Fuel prices have spiked since the U.S. and Israel attacked Iran on Feb. 28.

But the diesel volumes in the Trump-Putin deal won't materially lower prices because the shipments are small compared to total global demand of around 28 million barrels per day, analysts say.

The first shipment from Russia of 300,000 tons is equivalent to about 75,000 barrels per day (bpd) if rolled out over one month. The second tranche, of 500,000 tons, equals about 124,000 bpd.

Ukraine's President Volodymyr Zelenskyy has sharply criticized the diesel deal. Kyiv has pounded Russian refineries this year in an effort to cut the revenue the Kremlin collects from energy exports and curtail Moscow's ability to wage war.

The strikes forced Moscow to implement a diesel export ban in July. The Kremlin has partially lifted that ban to fulfill the Trump-Putin deal.

Several Republican senators also slammed the deal, signing a letter with Democratic colleagues that condemned the agreement as "a gift to our adversary and a betrayal of our Allies."