Trump strikes deal to ease Russia sanctions and import Russian diesel

President Trump announced that he has struck a deal with Russia that would ease US sanctions in exchange for Russia exporting its diesel to the US and Europe. However, experts are skeptical that this deal will meaningfully bring down fuel prices in the US as several factors driving the global energy crunch.

The US-Israeli war on Iran has had the greatest impact on oil prices. Despite the fact that the US Navy is helping to keep the Strait of Hormuz open to traffic, Iran continues to strike tankers passing through the Strait. The persistent risk has continued to drive up costs for insurance and for hiring tankers to transit the Strait. But this is not the only factor driving up oil prices.

On the other side of the Arabian Peninsula, Yemen’s Houthis are targeting Saudi oil infrastructure which the Saudis previously used to bypass the closure of the Strait of Hormuz. Meanwhile, Ukraine has been bombing Russian oil facilities, leading the Russian government to sharply restrict diesel exports. Given Ukrainian President Volodymyr Zelensky’s furious reaction to Trump’s deal with Putin, the Ukrainians may see an incentive to increase these attacks.