Russian refiners raise diesel output as export quotas support U.S. supply deal

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Russian diesel output rises

Highlights

Russian refiners raised diesel output from 160,000 tons per day in early October toward 180,000 tons per day after new export quotas mid-month.
Russia plans to supply over 300,000 metric tons of diesel to the U.S. immediately, 500,000 tons in November, and 1 million tons later, with potential for 3 million more.
LSEG data confirm a Malta-flagged tanker loaded with 40,000 tons of Russian diesel bound for New York on October 23, signaling ongoing regular U.S. shipments.

Quota changes lift refinery production

As reported by Reuters, Russian refiners are raising diesel production after the government granted export quotas tied to the Kremlin's fuel supply agreement with the U.S. Traders said exemptions to the diesel export ban have been in place since October 1 to allow shipments under the deal announced by U.S. President Donald Trump and later confirmed by Russia.

Trump said on October 9 that Russian President Vladimir Putin had agreed to supply diesel from Russia to the U.S. and global markets, while the U.S. temporarily lifts sanctions on Russian fuel. He said Russia would deliver more than 300,000 metric tons immediately, followed by another 500,000 tons in November and then 1 million tons after that, with a further 3 million tons depending on refinery conditions.

Industry sources said diesel output in Russia falls in the first half of October to about 160,000 tons per day from 175,000 tons per day in September. After new export quotas arrive in the middle of the month, production begins to recover toward 180,000 tons per day.

Export capacity grows as domestic demand eases

Since Russia's diesel export ban takes effect in August, oil companies have to cut production to align with domestic demand while limiting supplies to Central Asian countries covered by intergovernmental agreements. Domestic consumption typically falls to about 140,000 tons per day in October because of seasonal factors, including the end of grain harvesting and the summer driving season.

That leaves at least 40,000 tons per day, or more than 1 million tons a month, potentially available for export, although 0.2 million to 0.3 million tons may still be needed for neighboring countries, the sources said. They expect the government to keep the ban in place and continue using quotas to regulate exports while monitoring the domestic market and refinery output.

LSEG data show that a Malta-flagged tanker carrying 40,000 tons of Russian diesel and bound for New York appears on tracking systems on October 23. On the same day, Kremlin spokesman Dmitry Peskov says Russian diesel shipments to the U.S. will continue on a regular basis after the first tanker departs.

Our earlier article on the spike in crude oil shipping costs explained how conflict-related risks are driving tanker rates and insurance premiums sharply higher, turning freight into a much larger component of fuel prices. We also noted that rerouting away from chokepoints and using operational workarounds like ship-to-ship transfers can tie up vessel supply, keeping transport costs elevated and unevenly impacting importers, refiners, and consumers.

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