In 2022, in response to Russia’s unprovoked attack on Ukraine, President Biden placed sanctions on Russian oil, prohibiting its sale in the U.S. In February of this year, President Trump began attacking Iran. Worldwide, diesel fuel supplies have been tight for years: not due to lack or cost of oil, but due to refining capacity. Refineries, including those in the U.S. are running production as close to 100% as they can. Diesel is expensive, not because oil is expensive, but because the world can’t make enough to fill demand.
U.S. refineries do make enough diesel to fill domestic demand, which makes President Trump’s idea of banning export ridiculous. We have to export diesel. We make more than we can use domestically, and we don’t have storage for much excess. We produce about 5.1 million barrels of diesel per day. We consume about 3.7 million. We have perhaps 30 to 45 days’ of storage, at which point we’d have to stop making it or start exporting it.
And here’s the real kicker: we can’t just stop making it. A typical Gulf Coast refinery will make 42-46% gasoline, 28-32% distillate (mostly diesel, plus some heating oil), 8-12% jet fuel/kerosene, and small amounts of other stuff like asphalt, petroleum coke, LPG, propylene, lubricants, etc. Those percentages are adjustable a very little bit–you simply can’t get a barrel of diesel (or gasoline or any other single refined product) from a barrel of oil.
So in a bid to reduce diesel prices, President Trump on October 9 reversed the stance on Russian oil purchases, allowing Russian diesel into the U.S. market. How much could that reduce prices?
Trump’s order allows 300,000 tonnes of Russian diesel to be imported into the U.S. between October 9, 2026 and April 7, 2027. 300,000 tonnes of diesel works out to about 2.2 million barrels. U.S. diesel consumption averages about 3.7 million barrels per day. So Trump’s order allows for importing 60% of a single day’s consumption over a 6-month period. It averages out to 12,000 barrels per day (bpd) in a market that’s consuming 3.7 million bpd, or 0.324%. At best, with domestic prices at $6.27 per gallon that would give a reduction of 2 cents per gallon. But not in a market that’s already over-supplied. The problem is the worldwide price of diesel. Adding more diesel to the already over-supplied U.S. market won’t affect the worldwide price.
The only possible profit here is that, being under sanction, Russian diesel demands a much lower price. So whoever gets the import licenses from Treasury will be buying diesel at, say, $90 per barrel from Russia as opposed to the $115/barrel world price. There are still shipping fees, port fees, etc., but there’s still a hefty profit in it. And that 12,000 bpd over-supply of inexpensive diesel then allows export of 12,000 bpd at $115/barrel. Not a bad gig, really: buying diesel at $90 and selling at $115. That’s close to a billion-dollar windfall for Trump’s oil buddies, paid for in large part by you and me and everybody else in the country.
In the meantime, Russia has a long history of supplying military aid to Iran, and there is irrefutable proof that it’s happening even today.
What it all means is that American citizens are paying taxes to fund the President’s conflict with Iran. And now that we’re paying for Russian diesel we’re also paying for Iran to bomb our bases and those of our allies in the Middle East.
How much money are we talking about? At the current price of $6.27 per gallon, the Russian diesel deal works out to something like $575 million to $600 million just for the discounted diesel: a literal drop in the bucket of the world wide diesel market. But $600 million makes a heck of a lot of explosive drones (between 24,000 and 48,000) at $25,000 to $50,000 each.
No price reduction and increased attacks on allied bases. Clearly a masterful demonstration of unparalleled negotiation skills. Pure genius.
Thank you, Donald Trump.


