– Begynner å bli litt desperat

Donald Trump announced a deal with Russian leader Vladimir Putin on Friday, allowing Russia to supply more millions of barrels of diesel to the global market. Diesel prices in the US are unusually high, and the country is facing an election on November 3rd. Chief analyst Thina Saltvedt of Nordea Markets said she thinks things are starting to look desperate.

This is clearly related to the election and the high diesel prices in the US. Trump also recently stated he would not attack Iran before the election. He seems to be taking steps to try and bring down prices before the vote, Saltvedt said. Russian diesel exports were around 800,000 barrels per day before Russia banned exports in the summer.

Several Russian refineries have been damaged by Ukrainian drone attacks in recent times. Saltvedt is unsure how much diesel Russia can actually supply and how much impact the move could have on prices. The US has sanctions on Russia and has recently extended them, so dropping some of them now seems a bit odd, she added. Ole Hvalbye of ABG Sundal Collier says similar sanctions relief measures have been done before, but this one is mainly for the next four months.

For Russia, it's positive to avoid sanctions, but it may look like desperation from Trump's side to ease the situation before the election, he said. The first 800,000 tons of diesel announced by Trump corresponds to about 6 million barrels, if we use IEA conversion rates. This amount will likely only ease the shortage in the market for a few days.

The IEA reported a global shortage of about 1.6 million barrels of diesel and marine gas oil per day in August, mainly due to challenges in the Middle East and Russia. Russian refineries and infrastructure have been damaged by Ukrainian drones, and some areas struggle to produce enough fuel. So it's interesting that Russia is now part of this, Saltvedt said.

The bans on Russian diesel exports were due to their struggle to supply the domestic market. I believe there's a limited amount they can supply, but we don't know all the details, Saltvedt added. Diesel and gasoline prices in the US are high ahead of the election on November 3rd. According to AAA, diesel prices were close to $6.50, but dropped after the G7 agreed to release 100 million barrels of oil and diesel from their emergency stocks.

In the US, the transportation sector accounts for a significant portion of diesel consumption, using around 3 million barrels per day, according to the American Energy Information Administration. Trump's announced 300,000 tons now and 500,000 tons in November could potentially ease the market shortage for about three weeks, if the market continues to face a shortage of diesel like IEA estimated for August.

Trump seems to be focused on the period leading up to the election, and his recent actions bear that out. Both farmers, the transportation sector, and consumers are affected by the high prices, Saltvedt said. But there must be more to it to fill the stockpiles and bring prices down further, as sanctions need to be lifted on Iran or Ukraine or both, he added.

Hvalbye believes the Russian diesel will have an effect, but it will be temporary as much of the infrastructure is broken down. The timing is especially bad for the market, which is already priced sky-high, he said.