Russian diesel output climbs but the export surplus misses the pledges

The numbers tell the supply story. Russian diesel output fell from 175,000 tonnes a day in September to 160,000 tonnes in early October, then rose towards 180,000 tonnes after export quotas were issued in mid-October. Domestic demand typically eases to 140,000 tonnes a day in October. That leaves a surplus for export of at least 40,000 tonnes a day, or a little over one million tonnes a month. Between 200,000 and 300,000 tonnes of that goes to neighbouring countries under intergovernmental agreements. The diesel export ban in force since August is not expected to be lifted; quotas set the volume.

The commitments are larger than the surplus. The US deal announced on 9 October promised more than 300,000 tonnes of diesel at first, then 500,000 tonnes in November and one million tonnes after that. A further 3 million tonnes is under discussion, depending on the state of the refineries. The US Treasury granted a six-month exemption for Russian fuel. The arithmetic does not work. Once obligations to neighbouring countries are deducted, the exportable monthly volume falls to a band of 700,000 to 800,000 tonnes. The one million tonne tranche alone swallows a full month.

The threshold lies in production. Kyiv resumed strikes on refineries on 15 October after a three-day pause, and sources say repairing the existing damage will take months. If output drops back to 160,000 tonnes a day, the surplus for export halves and the tranche schedule slips; capacity, not the contract, is the binding factor. Goldman Sachs calculates that 800,000 tonnes of extra Russian diesel lowers US Gulf and European wholesale prices by only 1 to 2 dollars a barrel. Brent closed at 115.81 dollars on 26 October, and US diesel stood at 6.28 dollars a gallon on 19 October.