The U.S. government, led by Donald Trump, the President of the country, announced on October 9, 2023, an agreement with Vladimir Putin, the President of Russia, for the supply of Russian diesel to the markets of the U.S. and the world. This action is part of efforts to control fuel prices and comes ahead of the U.S. midterm elections.
Details of the Agreement and Supply Volume
According to Trump, this agreement includes an initial supply of over 300,000 tons of diesel, followed by 500,000 tons in November, one million tons in later stages, and three million tons in subsequent supplies. In this context, Washington has temporarily eased sanctions related to Russian diesel shipments until April 2027.
Impact on the Global Energy Market
Given the volume of supply discussed, experts believe that this agreement will not have a significant short-term impact on global energy prices. Hashim Orayi, a professor at Sharif University of Technology and president of the Iranian Energy Associations Union, stated that although this agreement could help Trump leverage the created atmosphere for the elections, it will not alone bring a noticeable change in U.S. diesel prices or the equations of the global energy market.
Orayi also pointed out that if the closeness between Washington and Moscow increases, there is a possibility of an increase in transaction volumes, but this volume of trade will not necessarily be enough to alter global energy equations. He emphasized that this agreement could have significant political and geopolitical consequences.
Political and Geopolitical Consequences
Orayi, referring to the strategic competition between the U.S. and China, noted that the rapprochement between the U.S. and Russia could also affect Washington's relations with Europe. He also mentioned that if the two countries can overcome their differences, this cooperation could have broader implications in the global energy market.
However, he emphasized that changing the destination of diesel shipments does not necessarily mean an increase in global supply and that some of these shipments may have previously been allocated to other markets such as India and China.
Analysis of Impact on Iran and the Strait of Hormuz
Orayi further emphasized that a potential rapprochement between the U.S. and Russia could affect the strategic importance of the Strait of Hormuz. He stated that if the two major fossil fuel-producing powers engage in broader cooperation, this could impact the position of other producers and energy transit routes.
Ultimately, Orayi pointed out that the Trump-Putin agreement does not mean a sudden increase in Russia's oil or diesel production capacity, and it cannot be expected that global oil and diesel prices will significantly decrease or that consumers worldwide will feel a noticeable reduction in their fuel costs.
