Diesel prices slipped on Monday after Donald Trump claimed that Russia and Ukraine had entered an “energy ceasefire”, although analysts warned any agreement would be unlikely to bring lasting relief to global fuel costs.
European diesel prices fell 5 per cent to $1,410 a tonne on Monday morning before recovering to about $1,450. Brent crude oil, the international benchmark, fell in early trading but was later up 2.2 per cent at $107 a barrel.
The moves came after the US president said on Sunday that there had been an “energy ceasefire” in the war in Ukraine.
“Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine,” Trump wrote on his Truth Social platform on Sunday. “Both parties have agreed. Do not break it!”
Despite Trump’s announcement, it was unclear whether any such ceasefire would take effect.
Ukrainian President Volodymyr Zelenskyy said on Sunday that it was “important that [the energy ceasefire] becomes a reality”, adding that Russian forces had attacked a power plant in Kharkiv that evening.
It was not immediately clear whether Russia had agreed to Trump’s deal.
It followed an agreement the US president announced with Moscow on Friday, releasing Russian diesel into the global market as Washington aims to quell fuel prices ahead of November’s midterm elections.
Traders shrugged off the move, with European diesel prices closing just 1.7 per cent lower on Friday. US prices fell 3 per cent on Friday’s announcement but were broadly flat on Monday, with wholesale diesel for delivery in New York up 0.1 per cent at $4.75 a gallon. Prices remain near their wartime highs, with US diesel about 75 per cent above its prewar level and European diesel about 95 per cent higher.
The small scale of the diesel exports promised by Russia meant there would be very little impact· on global supplies in the short term, analysts said.
Any possibility of increasing exports over time — as requested by Trump — hinges on Russia’s ability to fix its refineries that have been battered by Ukraine.
Jim Reid, global head of macro research at Deutsche Bank, said that while Russian diesel returning to global markets would help to contain prices, “the overnight strikes make the ceasefire increasingly uncertain and highlight strains between Washington and Kyiv”.
The Trump administration has threatened to stop the procurement system that provides Ukraine with weapons to press Kyiv to halt its deep strikes on Russian energy infrastructure, the FT reported on Sunday·.
The president’s social media post represents the latest US effort to bring down energy costs, which have rocketed as a result of Russia’s war on Ukraine and the US war on Iran. High oil and diesel prices are hitting the popularity of Trump and his Republican Party ahead of US midterm elections in early November.
“Given the political-economic situation there is a lot of impetus to do more,” said Anthony Yuen, head of energy strategy at Citigroup, who noted that Republican-leaning districts “tend to consume more diesel”.
Wei Li, head of multi-asset investments at BNP Paribas Securities China, said optimism around the agreement with Russian President Vladimir Putin had helped to bring down US heating oil futures.
The declines came even after Houthi forces launched missile strikes on Riyadh’s international airport on Saturday.
The attack on the Saudi Arabian capital killed at least 12 people and injured more than 300. A second strike on Sunday killed one person and injured 11 others.
Houthi rebel forces in Yemen have been attacking neighbouring Saudi Arabia, which backs Yemen’s central government in a civil war that began in 2014.
Yuen added that last week’s resumption of Chinese refined oil product exports was adding further support to the fall in diesel prices. “The Chinese export volume could be on par with or larger than [the] Russian volume,” he said.