Diesel runs high as market doubts the Trump-Putin Russian supply deal will cut US prices
Diesel is still expensive, and the deal meant to bring it down is drawing skeptics. Trump and Putin agreed last week to move Russian diesel into the US and global market, 300,000 tons right away and another 3 to 5 million tons from Russian refineries after that. Traders don't think it reaches your rack in time to matter this quarter.
The Russian deal
Prices jumped after the Iran war started. Haulers are eating it, and so are the farmers and school districts running fleets. Milwaukee Public Schools runs about 650 yellow buses. Filling one went from roughly $260 to over $450. The district buys on three-year contracts tied to a yearly CPI benchmark, so the hit comes through slowly, but it comes through.
The volume is real. 300,000 tons immediate plus 3 to 5 million tons later is not nothing. The market read it as slow and conditional, and oil prices eased only slightly on the news as traders weighed Russian relief against Saudi supply risk. Critics also argue the deal strengthens Russia's hand, along with Iran's and China's, which could cut against any price relief it buys.
Saudi supply
Brent is $105.43 and WTI $92.60, both down a touch from Monday's close and still higher than last week. Crude topped $106 the day before as Houthi attacks on Saudi Arabia put a risk premium back into the barrel. Saudi Arabia's energy minister pledged to keep exports flowing, which took some heat out of the tape.
Prince Abdulaziz bin Salman said Riyadh plans to raise its East-West pipeline capacity to 10 million bpd within two to three years, up from about 5.8 million now. That line moves crude to the Red Sea coast and skips the Strait of Hormuz. It just came back after a two-week shutdown following September drone attacks. More bypass capacity could matter a lot to US refiners if the strait turns into a shooting gallery.
Michigan and the pump
Governor Gretchen Whitmer signed an executive order to support Michigan farmers as diesel costs collide with harvest. Expect other farm-state governors to look at the same move if rack prices stay firm through the fall work.
Washington motorists are paying $5.45 a gallon for regular, down 3 cents on the week and 11 cents on the month, still close to a dollar above the national average. The easing is welcome and small. Margins are tight across the supply chain, and jobbers moving product on thin spreads are feeling the squeeze as much as anyone.
RaceTrac
RaceTrac, the 92-year-old chain, is opening in a new major market. For c-store operators, a well-capitalized regional pushing into fresh territory means sharper fuel pricing and tougher inside-sales competition wherever it lands. Worth watching if it shows up near your sites.
What to watch
Whether the first 300,000 tons of Russian diesel actually lands, and where it prices when it does. Watch the Strait of Hormuz and the next Houthi strike for the crude premium, since that is doing more to your diesel cost right now than any Washington handshake. Harvest demand across the farm belt could keep diesel racks firm into November regardless of what the deal delivers.