Trump Just Blinked On Russia

I don’t often do a full-blown double-take over a headline.

I know we tend to be more skeptical of the hyperbolic nature of social media. More often than not, we’re more than justified for our disbelief. 

Then I saw the news that President Trump struck a deal with Putin for Russia to export diesel fuel to us, and my jaw immediately hit the floor. 

The real devil here hid in the details, and it’s mindblowing to think of this as anything other than political theater. 

Oddly, it wasn’t the size of the exports that first struck me as absurd, but we’ll touch on that in just a moment. 

I couldn’t help but think, “Did Trump just %@#! Ukraine’s chance to defeat Russia?”

Maybe. 

But to understand why, we can take a page from history. 

Back in World War II, nearly 180 American B-24s lifted off from airfields in Libya in August of 1943 and flew about 1,000 miles to bomb the oil refineries around Ploesti, Romania. 

Those refineries were critical targets that fed Hitler’s war machine, so Allied commanders figured the quickest way to slow an army down was to cut off its gas.

Believe me, it was a brutal mission, with more than 50 never making it back. To make matters worse, the Germans had much of the damage repaired before long. 

Still, the idea stuck with every war strategist who came after. 

The idea was simple: An army can’t fight without fuel.

This year, Ukraine has spent most of its time proving this war thesis over and again, executing successful strikes using drones in place of bombers. 

Every single one had a single mission burned into its core — decimate Russia’s energy infrastructure. 

So, you can understand why I was stunned last Friday when President Trump announced his diesel deal with Putin. 

The timing couldn’t have been more coincidental, too. 

Remember, three weeks earlier, Trump enacted a tough new round of Russian sanctions. 

Now, the Treasury is easing sanctions on Russian diesel through April 2027, and it’s the first license of its kind to run longer than the standard 30 days since the war began.

Look, I get the pitch. 

Diesel is hovering near record highs, truckers and farmers are angry, and the midterms are three weeks away. Any politician in that spot wants to be seen doing something.

But once you read the fine print, the deal sours almost right away. 

Let’s start with the numbers. 

According to the deal, Russia will ship us 300,000 tons of diesel right away, another 500,000 in November, and 1 million more after that. 

Then, a final 3 million tons would follow, based on the condition of their diesel refineries.

First, look at that last addendum to the final clause, because delivery of that final chunk of diesel completely relies on how much damage Ukraine’s drones have done to Russian refineries

That 4.8 million tons the headlines tout are a ceiling, and one that Moscow may never even reach (which doesn’t mention the fact that there’s no concrete date on when we’d ever get it). 

Now here’s the catch…

Even if every last ton showed up in the U.S., it still wouldn’t move the needle. 

That initial 800,000 tons sounds like a lot of fuel. 

Guess what? It’s supposed to.

The problem is that it only satisfies about a day and a half of diesel demand. 

If you feel truly optimistic and think we get the full delivery, we’re talking about less than 10 days of demand. 

I’m not that optimistic, and not many people are. 

If the numbers add up this poorly, who actually comes out ahead? Well, the answer is clearly Putin. 

Remember, Russia banned its own diesel exports back in July because Ukrainian strikes had left it short at home. Within hours of Trump’s post, the Kremlin lifted that ban. 

Russia also gets to move its summer-grade diesel before winter grades are needed at home, and it’s getting cold, hard cash for each barrel sold. 

In other words, Ukraine’s drones had Moscow on its heels, and Washington just threw it a rope.

All of this political theater, however, pales in comparison to the real consequences of President Trump making this diesel deal with the devil. 

From here on out, President Trump will continually lean on President Zelensky to stop hitting refineries. He’s already complained that Ukrainian strikes are causing a shortage of diesel fuel, going so far as to call for Ukraine to replace its leader. 

To date, those Ukrainian strikes have shuttered roughly one-half of Russia’s refining capacity, with some more rosy estimates running closer to one-quarter. 

Either way, nothing else Kyiv has done this year has cost Moscow as much.

Just as the strategy of targeting Russia’s energy infrastructure is beginning to take a heavy toll, we’re asking them to pull back. 

All for less than two weeks of diesel fuel to knock down prices in time for the midterm elections. 

Don’t get me wrong, I’d love to see diesel prices come down, and a few extra cargoes certainly won’t hurt.

However, a few more Russian imports won’t solve the problem, because the shortage is a physical one. Keep in mind that U.S. distillate inventories sit about 13% below their five-year average, and that’s with refineries running full-steam for more than half a year. 

Add to this mix the ongoing crisis in the Middle East (a war that is also far from over), and we’ve got a perfect storm for higher prices that’ll persist for months. 

Now think of how our policies will change once the midterms are over. 

When the election show is over in early November, the same constraints will still be there. 

I’m talking about too little fuel, too little refining capacity, and too much demand.

Get ready, this ride is just starting.