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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


The Diesel Deal on further review. The Energy Report 10/13/2026

Now oil prices are selling off once again as the diesel deal gets further review. Oil prices are having a delayed downward reaction to the news that President Trump is temporarily easing sanctions on some Russian diesel and that Russia agreed to release volumes of the fuel. Traders seem to 1st ignore the headline but they’re getting a turnaround Tuesday as they realize that the Houthi attacks on Saudi airports—including the deadly strikes on Riyadh’s King Khalid International Airport—did not meaningfully impact crude oil production or supply flows. At the same time, the volume of diesel being released, while helpful, is not huge but enough to ease panic. The amount of U.S. diesel that has to cross the Atlantic to keep Europe supplied will be a little less and that does matter.

While some criticized the decision, President Donald Trump on Monday defended his administration’s temporary easing of restrictions on Russian diesel supplies. The reality is that at this point every barrel counts in this tight market.

The deal announced by President Trump after a call with Vladimir Putin) that Russia would immediately supply more than 300,000 metric tons (~2.25 million barrels) of diesel to U.S. and global markets, another 500,000 tons in November, and 1 million tons “immediately thereafter,” with an additional up to 3 million tons later depending on the condition of Russian refineries (damaged by Ukrainian attacks). The total announced volume is roughly up to 4.8 million metric tons (~36 million barrels).

Reports say that The U.S. Treasury’s OFAC issued General License 135 authorizing transactions related to the sale, delivery, offloading, and importation (including into the U.S.) of Russian-origin diesel through April 7, 2027.

Russia partially lifted its own diesel export ban (in place since July) effective October 10, initially allowing 500,000 tons. Deputy Prime Minister Alexander Novak later indicated Russia could push monthly exports back toward 3–3.5 million tons by year-end if conditions allow. I guess those conditions would mean that Ukraine would stop attacking the refineries but Ukraine of course accused Russia of attacking their infrastructure after the so-called deal so there is still a lot of concern that the ceasefire between Russia and Ukraine is going to hold.

And while these volumes seem relatively modest relative to demand the realty is it is enough of a cusion to reduce some of the panic buying. The first tranche is less than one day’s U.S. transport-sector diesel use (roughly 2.9 million barrels per day per EIA data) yet it less diesel the US will need to export.

The U.S. typically exports around 1.5 million barrels of diesel per day and has been a key supplier to Europe after the continent banned direct Russian refined products.

ity. President Trump’s Trump yesterday in a Truth Social post defending the move amid bipartisan and European criticism, Trump wrote: “The European Union paid Russia 250 Billion Dollars for Energy, and the Fake News Media doesn’t want to get near that story. I made the right choice for the American People — ALWAYS, AMERICA FIRST!”

And the the criticism coming out of parts of Europe and from certain U.S. lawmakers is rich. For decades Europe deliberately made itself more dependent on Russian energy—gas pipelines, oil, refined products—while lecturing the rest of the world about climate, diversification, and moral superiority.

After the 2022 invasion they imposed bans and price caps, yet according to trackers like the Centre for Research on Energy and Clean Air the EU has still sent roughly €200+ billion (consistent with the $250 billion figure Trump cited) to Russia for fossil fuels since the war began. That money helped fund the very war machine they now condemn. They were OK buying Russian diesel when it suited their purposes get seen aghast that president trump he would work with Russia to release even a so-called modest amount of diesel.

Meanwhile, Europe has leaned heavily on U.S. diesel exports to fill the gap created by its own policy choices and the loss of Russian supplies. When U.S. prices spiked and the administration briefly floated export restrictions to protect American farmers, truckers, and consumers, Europe scrambled. And even though it was a bluff by the Trump Administaion they realized that a US export ban reality would have left them shortest supply to maybe not able to stay warm in the winter.

Now, when the U.S. temporarily opens a limited channel for Russian diesel to ease global tightness and reduce the burden on American refiners and exporters, the same voices cry foul and call it a gift to Putin.

Trump’s response ties the energy decision to the same America First logic he applies to tariffs: prioritize American pocketbooks and leverage over foreign dependency. The volumes involved are not going to flood the market or single-handedly crash prices.

They are a pragmatic, short-term pressure valve in a market already strained by Houthi attacks, refining constraints, and geopolitical risk. Traders are correctly assessing that the Saudi airport strikes, while tragic and escalatory, have not yet shut in meaningful crude supply—so the earlier diesel-deal softness is being partially reversed. What the deal does achieve is a modest reduction in the volume of U.S. diesel that must be shipped across the Atlantic to keep European tanks from running dry.

Critics can posture all they want about tariffs, sanctions, or morality. Energy markets respond to supply, demand, and barrels—not moral lectures from continents that spent decades wiring themselves to Russian hydrocarbons and then acted shocked when the bill came due. America First means protecting American consumers and workers first—whether through tariffs that shift burdens outward or targeted energy moves that lower prices at home. Europe’s long dependence on Russian supply, and its continued reliance on U.S. exports, makes the selective outrage look exactly like what it is: hypocrisy.

Oil is still finding underlying support from the Middle East risk premium. Brent is trading in the mid-$104s to $105 area and WTI near $92 after reversing some of the earlier softness tied to the Trump diesel news. The Houthi attacks keep the geopolitical risk alive for Saudi infrastructure and broader regional flows, even if production itself has held up. Physical markets remain tight, and the limited Russian diesel volumes are more of a modest relief valve than a market-flooding event.

Natural gas is trading around $3.12–$3.13/MMBtu after easing for a second day as Gulf producers restore operations following Hurricane Isaias. The offshore shut-ins were limited—only about 2% of total U.S. marketed gas production—so the supply hit was modest once the storm moved through.

Fox Weather’s coverage has been outstanding on how shifting forecasts are driving the market. Recent warmer outlooks across much of the eastern U.S. have delayed early heating demand and taken some of the weather premium out of prices. At the same time, model runs are showing colder shots in the 15-day window, especially in the Midwest, which keeps traders watching closely for any sustained cold that could flip the near-term demand picture.

Looking ahead, the fundamentals are well supplied. EIA sees end-of-October storage near 3,850 Bcf (roughly 2% above the five-year average), with production on track for record levels around 112+ Bcf/d. That cushion should keep prices relatively contained unless we get a colder-than-expected winter or production freeze-offs. LNG exports remain a key demand driver, but weather will still be the biggest swing factor as we move deeper into the heating season. The bottom line: prices are holding in the low $3s with solid supply underneath them. Keep an eye on the Fox Weather models—any meaningful cold shift could tighten the balance quickly. Download the ap

So Make sure you download the Fox Weather ap and Stay tuned to the Fox business a Network ! Invested in You! Stay tuned. Call to open a trading account today at 888-264-5665 or email pflynn@pricegroup.com.



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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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