Russian Refiners Ramping Up Diesel Output to Fulfill US Supply Deal

Russian oil refiners are increasing their diesel output in October, reversing recent production cuts after the government began issuing export quotas to fulfill a new supply agreement with the United States, according to two industry sources. The move is set to release significant volumes of Russian diesel onto global markets following a period of restricted supply.

Details of the US-Russia Agreement

The production ramp-up follows a deal announced on October 9 by U.S. President Donald Trump, which Russia later confirmed. Under the terms of the agreement, the U.S. will temporarily lift its sanctions on Russian fuel, allowing for substantial diesel imports to the U.S. and global markets.

According to the announcement, the deal includes several tranches of supply:

• An immediate delivery of more than 300,000 metric tons (about 2.25 million barrels).
• An additional 500,000 tons in November.
• A subsequent 1 million tons.
• A potential further 3 million tons, contingent on the operational condition of Russia's refineries.

Production Rebounds from Export Ban

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Russia had implemented a ban on most diesel exports in August, forcing its oil companies to curtail refinery runs to match domestic needs. Industry sources reported that this caused average daily diesel output to fall from 175,000 tons in September to approximately 160,000 tons in the first half of October.

Following the issuance of new export quotas from October 1 to facilitate the U.S. deal, production has begun to recover, with sources indicating it is now trending towards 180,000 tons per day.

Market Impact and Outlook

The increased output coincides with a seasonal decline in Russia's domestic diesel consumption, which typically falls to around 140,000 tons per day in October as the agricultural harvest and summer driving season conclude. This creates a potential exportable surplus of at least 40,000 tons per day, or more than 1 million tons per month.

Concrete evidence of the deal's implementation emerged on October 23, when LSEG vessel tracking data showed a tanker with 40,000 tons of Russian diesel bound for New York. The same day, Kremlin spokesman Dmitry Peskov stated that Russian diesel shipments to the U.S. would continue on a regular basis. Sources expect the Russian government to maintain its general export ban while using the quota system to regulate flows based on domestic market conditions.