The new agreement between Donald Trump, the President of the United States, and Vladimir Putin, the President of Russia, regarding diesel fuel supply has not resulted in a significant decrease in global prices. Energy market experts believe that high diesel prices due to wars and disruptions in transportation, especially in the Persian Gulf, will remain elevated.
Reasons for the Increase in Diesel Prices
Semina Sultan, a foreign trade expert at the German Economic Institute (IW) in Cologne, identifies the main cause of high prices as the war in Iran and disruptions in transportation from the Strait of Hormuz and the Bab-el-Mandeb Strait. She states that these issues have caused disruptions in production and increased transportation costs for fuel.
Read more: Oil Prices Rise After Houthi Attacks on Saudi Airports
Diesel Market Situation
Despite these problems, it seems that the volume of crude oil currently flowing through the Strait of Hormuz is at 13.5 million barrels per day. However, the volume of refined diesel has decreased to about 677,000 barrels per day, which is significantly lower than the 3.6 million barrels before the war.
Carsten Fritsch, a commodities analyst at Commerzbank, also believes that the price increases are related to wars. He adds that if the situation in Ukraine and the Middle East does not change, there are few solutions to address these supply issues.
On October 9, Trump announced that he would temporarily suspend some sanctions on Russia and begin importing Russian diesel. He wrote that diesel prices for Americans and globally would quickly decrease. However, experts believe that even if Russia can flood global markets with cheap diesel, prices will not drop as much as they have recently increased.
Considering that the United States has now become the largest exporter of diesel in the world, analysts have concluded that Trump's recent agreement with Russia will not have a significant impact on the market. Additionally, if export restrictions are imposed, buyers in Latin America and the European Union will be particularly affected. This situation reflects the inability to solve the diesel shortage problem.
Read more: Bipartisan Bill Proposed to Ban Russian Oil Purchases in the U.S. · Ashley Hinson Opposes Trump's Agreement on Diesel Imports from Russia
