The Russian diesel tanker bound for New York, and the gap it opens in the West's sanctions wall
A single cargo cannot cool a diesel market squeezed by the war in the Gulf. The waiver that let it sail matters more, for Moscow's revenues and for Europe's hand in the Ukraine talks.
This week, in brief
- A tanker of Russian diesel is signalling New York as its destination, due on 7 November according to Kpler, under a deal that came with a US waiver on some Russian energy sanctions. The cargo matters far less than the waiver that let it sail, which gives Moscow a paying customer in the middle of Ukraine peace talks.
- US gasoline fell 6 cents in the week to 22 October, to $4.27 a gallon, with crude still nearing $100 a barrel as of 15 October, AAA said. The relief at the pump belongs to gasoline. Diesel, which averaged $6.29 a gallon in September according to the EIA, is the fuel that runs through freight and into prices.
- Kering fell 12% in early trading on 23 October after a disappointing third-quarter update, a reminder that Europe's luxury groups have problems the oil price did not create.
- Most recent polls put Gadi Eisenkot's Yashar party ahead of Likud before Israel votes on 27 October, which makes the election a test of whether the politics of the Iran war is shifting at home.
A Russian diesel cargo buys Moscow more than it buys America
If you pay for anything that travels by lorry, its price now depends on fuel being fought over in the waters around Iran, and America has just started taking some of that fuel from Russia. The deal Donald Trump announced on 9 October, 300,000 tonnes of Russian diesel for global markets, came with a US waiver on some energy sanctions against Moscow. The cargo is the sideshow. The Research Brief takes the view that the deal will do nothing to ease America's diesel squeeze, and that US retail diesel will average more in November, the month the tanker lands, than the $6.29 a gallon the EIA recorded for September.
Russia's diesel and gas exports had already fallen to 190,000 barrels per day in the third quarter, from 850,000 in the first, and a tanker that docks in New York on 7 November cannot make up for a Gulf war in which at least 24 sailors have died since late February. What the deal does is hand Moscow a buyer, granted as Ukrainian and European diplomats arrived in Miami to talk about ending the war. The strongest case against us is that gasoline is already easing, to $4.27 a gallon in the week to 22 October, and a waiver used once is easily used again. If more Russian cargoes follow quickly and diesel prices fall noticeably with them, we are wrong.
For you, in one line
UK · Mortgage, rent and bills
Nothing in this diesel story moves UK mortgage rates, rents or energy bills this week; the Budget and the Bank of England's next decision matter more.
Continue reading the full issue.
You have read the week in brief, the Editor’s View and what the week means for you, in one line. Members also get:
- The Deep Dive
- Flashpoints
- The Rest of the Week
- Markets in Brief
- The Week Ahead
The week in brief, the Editor’s View and what the week means for you, in one line, by email every Sunday. No card.
The Research Brief is editorial commentary and general information only. It does not constitute investment advice, nor a personal recommendation to buy or sell any financial instrument. Capital is at risk and past performance is not a guide to future performance. You should seek advice from an independent, regulated financial adviser before making any investment decisions. This publication is not authorised or regulated by the Financial Conduct Authority (FCA).
Sources
The pages behind this issue's figures and claims, by the section they support; official sources first. Subscription pages, and pages that would not open when we checked them, are named without a link.
The Deep Dive
- Bank of England
- bp.com · Investors ·
- eia.gov
- Federal Reserve
- Freddie Mac · Mortgage Rates ·
- shell.com
- US Bureau of Labor Statistics
- AAA ·
- AAA · Gas Prices Not Budging Much as Crude Oil Remains High ·
- ABC News (Australia) · Israelis are heading to the polls in their most seismic election in decades ·
- Al Jazeera · Why do the US midterms matter for Trump and Congress? ·
- Al Jazeera · Houthis strike Aramco hours after Saudi-led coalition hits Sanaa oil site ·
- Al Jazeera · Why is US turning to Russia for diesel despite sanctions? ·
- Al Jazeera · Trump announces Russian diesel deal amid soaring US fuel prices ·
- Axios
- CNBC · Dow tumbles more than 600 points as oil prices rise and market sell-off hits most sectors ·
- CNBC · Tanker attacks in Strait of Hormuz surge to wartime high as Iran tries to choke off oil exports ·
- CNBC · Britain is on 'thin ice,' warns ex-Bank of England chief economist — and it must act to 'appease financial markets' ·
- CNN · Who is Gadi Eisenkot, Netanyahu’s main challenger in Israel’s elections? ·
- Euronews · First Russian diesel shipment is heading to US under Trump-Putin deal ·
Have the next one arrive on Sunday.
One issue a week: the week’s biggest story and what it means for your country and for you, the running flashpoints, markets, and the week ahead. No advertising.