Trump's Russian Diesel Is a Legal Hot Potato With a Five-Year Fuse

A Malta-flagged tanker called the Agioi Fanendes left the Russian port of Primorsk on Oct. 22 carrying nearly 40,000 metric tons of ultra-low-sulfur diesel, and ship-tracking data has it arriving at the Port of New York and New Jersey on Nov. 7, four days after the midterm elections. Nobody has publicly said who bought the fuel, and Sen. Richard Blumenthal, D-Conn., has asked the ship’s owner to identify the buyer and everyone else involved by Oct. 31.The cargo is the first visible piece of the deal President Donald Trump announced Oct. 9, after a call with Vladimir Putin that was supposed to be about a suspected plague case in Russia. He announced it while envoys Steve Witkoff and Jared Kushner were meeting Ukrainian officials in Miami about a proposal to end the war, saying Russia would start with 300,000 tons of diesel right away and scale up from there, and as he left the White House for a campaign rally, he told reporters, “I want to thank President Putin.” Treasury issued a license authorizing the trade the same day.Washington spent years tightening the screws on Russian energy, and Congress wrote the import ban into law in 2022, so a president thanking Putin for diesel on his way to a rally went over about as well as you’d guess. Four days later, 12 senators, six of them Republicans, wrote to Trump asking him to rescind it. Much of the debate has centered on the politics and the fallout for Ukraine, which matters, but there’s a more practical question that gets less attention: what happens when the fuel actually shows up, and can anyone take it without worrying about a knock on the door later?What a Treasury License Can’t DoThe document doing the work is OFAC General License 135, which authorizes transactions tied to the sale, delivery, offloading, and importation of Russian-origin diesel, including into the United States, through April 7, 2027. It’s a Treasury license rather than an executive order, and that distinction carries the whole legal fight, because a license can only relax rules the executive branch wrote itself.Most of the Russia sanctions Treasury enforces rest on emergency powers that presidents have used since 2014, and Scott Anderson, a senior editor at Lawfare and a former State Department lawyer, says Trump can almost certainly waive those at will, but the import ban is another matter. Joe Biden banned Russian oil and fuel imports by executive order in March 2022, and Congress followed later that spring with the Ending Importation of Russian Oil Act, which put the ban in statute for everything under Chapter 27 of the tariff schedule, diesel included. A president can lift it only if conditions are met, among them a peace deal accepted by Ukraine’s government and advance notice to Congress, and none of that has happened. Treasury’s only public explanation so far is a post on X saying the license is consistent with earlier actions and complies with all applicable laws. Anderson says the administration has a colorable argument built on language in the 2022 act that ties it to the original executive order, but that it’s far from clear a court would accept it. The White House does have some precedent on its side, since Treasury issued a series of 30-day licenses this spring, aimed at easing prices that spiked with the Iran war, for Russian oil already loaded on ships, and they passed without much fuss, even though there’s a separate argument that Congress should have been given advance notice of licenses that significantly change Russia policy. This one runs six months and covers future shipments, which is a bigger ask.Blumenthal put the objection more bluntly in his letter to the shipowner, writing that the president may have issued a license but “only Congress can make it legally valid.”The license is also drawn around diesel alone, which Anderson reads as a possible nod to the Graham Sanctioning Russia and Iran Act, the sanctions law Trump signed in September. That law defines crude oil in a way that leaves diesel out, so the administration can argue it isn’t working against the letter of the statute, though whether it honors the spirit is a harder question.Who Signs for the Cargo?Trump himself seemed to hedge on the U.S. part of the equation earlier this month, telling reporters the arrangement wasn’t really with him and was “a deal for the world,” which sits awkwardly next to a tanker steaming for New York Harbor. If the fuel does arrive, though, someone has to take title to it, a terminal has to let it dock, a bank has to move the money, and an insurer has to cover the ship, and each of them is looking at the same exposure. The White House didn’t say at the announcement who would be paying for the fuel, and the buyer of the first cargo still hasn’t surfaced.Importing goods contrary to law carries criminal penalties under federal customs law along with civil ones, and Anderson notes that Trump could use his pardon power to shield importers from the criminal side but not the civil side, which can reach the full value of the cargo and the forfeiture of the vessel that carried it. Customs penalties can be pursued for up to five years after a shipment arrives.That five-year window is the real answer to whether a company could get stuck after the election, because it doesn’t depend on who controls Congress, and a president who takes office in January 2029 would still have years left on the clock for a cargo that lands in November.Lawmakers have already started building a paper trail, beginning Oct. 24 when six senators and one House member asked major banks and port authorities in Texas and New York to preserve shipping documents, contracts and communications with government officials, and three days later Blumenthal asked the ship’s owner, the Greek firm EASTMED, to identify the seller, buyer, charterer, insurer, terminal operator and distributor, and to say whether any federal agency had given it instructions. So Treasury has said yes, while the people who would have to touch the cargo are being asked to hang on to their emails.Allies add friction of their own, since UK and EU sanctions on Russian diesel are still in force, which Clyde & Co says bars banks and insurers based there from helping with the shipment unless it’s price cap compliant, and one of the three tankers due next month, the Leruo, is sanctioned by Britain, the EU and Canada.Arriving After the Votes Are CountedThree tankers carrying about 140,000 metric tons are scheduled to reach U.S. ports between Nov. 7 and Nov. 11, which puts the first unloading after the polls close, though the dates have shifted from report to report. NBC News had the Agioi Fanendes closer to Nov. 10, and gCaptain retracted a story this week about a separate cargo it had expected in Norfolk on Nov. 2. Moscow is treating the shipments as routine, with Kremlin spokesman Dmitry Peskov saying more tankers will follow regularly, and Putin’s own readout of the call described Russia as ready to supply oil and oil products to American and global markets, which is a wider offer than diesel.Democrats have been heavy favorites to take the House, with Polymarket traders putting the odds at 93 percent earlier this month and a Senate flip at roughly 65 percent. A Democratic House would bring document requests and subpoena power, and a sweep, which would be worse for the deal, would put Senate committee chairs behind the same questions.A new Congress wouldn’t be seated until January, though, and Trump would still hold a veto, so the midterms are better read as a pressure point than a trigger, and the opposition isn’t strictly partisan anyway. Republican Sens. Susan Collins of Maine, Lisa Murkowski of Alaska, Thom Tillis of North Carolina and John Curtis of Utah joined a bipartisan statement saying the imports violate the 2022 ban; Rep. Brian Fitzpatrick, R-Pa., has promised bipartisan legislation to block Russian oil purchases; and Senate Armed Services Chairman Roger Wicker of Mississippi has predicted the imports never materialize. Trump’s answer to GOP critics has been to dismiss them as “Republicans that can’t really be serious.”What a landed cargo does change is who can sue, since Anderson suggests competitors such as biodiesel and renewable diesel producers would likely have standing once imports actually happen. Importers have also seen how quickly this administration’s rules can move. The Graham act passed the Senate 86 to 11 and told Trump to impose new tariffs on the biggest buyers of Russian oil by Oct. 18, and on Oct. 16 he signed an executive order that put the duties on the books and waived them in the same document. Anyone who has spent the past couple of years importing goods under tariff rates that kept shifting will recognize the setup, which is committing to a cargo on one set of rules and finding out the rules changed while it was at sea, and that’s a harder sell when the penalties can include the ship itself.The Part Kyiv Pays ForAnderson argues the heaviest cost lands on Ukraine, where Trump declared an “energy ceasefire” within days, without consulting Kyiv or Moscow, after Putin appeared to persuade him that Ukrainian strikes on Russian refineries were driving up global prices. Ukraine held off briefly and appeared to be back to hitting Russian refineries by Oct. 15, while Russia kept striking Ukrainian energy sites, and Trump has since blamed Volodymyr Zelenskyy for America’s diesel bill.Washington is also easing pressure on Moscow while London and Brussels keep theirs on, which isn’t a small thing to hand allies, and the 12 senators who asked Trump to rescind the deal called it “a betrayal of the people of Ukraine.” In Britain, Tory leader Kemi Badenoch called the move a disappointing step backward on Russian oil sanctions.A Couple of Hours of DieselThe White House’s case is simple, and it isn’t crazy. Diesel was running above $6 a gallon in early October, the war with Iran has squeezed supply through the Strait of Hormuz, and a Trump administration official told Semafor that taking Russian fuel is an inevitable consequence of that war. Spokeswoman Taylor Rogers has called the deal a great way to supply the global market and bring prices down, and it’s one lever among several, since Trump has also signed an order loosening rules on red-dyed diesel and pressed Germany and France to release reserves.The supply math is where it gets thin. Russian diesel output has fallen by about 30 percent, according to the International Energy Agency; Ukrainian drone strikes have hammered its refineries, and Moscow had been restricting exports to feed its own market before the deal, so it isn’t clear Russia can ship everything that was promised. Even if every ton shows up, the full 4.8 million tons Trump described adds up to about 10 days of U.S. demand, and Goldman Sachs figures it would trim prices by only $1 to $2 a barrel.Anderson noted in mid-October that global diesel prices hadn’t moved in any meaningful way since the announcement. The first tanker is smaller still, at roughly 300,000 barrels, and it has already drawn a Senate demand letter and a five-year liability clock that outlasts the license. Somebody in New York will have to decide whether a couple of hours of diesel is worth five years of explaining it.By Michael Kern for Oilprice.comMore Top Reads From Oilprice.comUK National Grid to Extend France Power Link Operation to 2050Trafigura Signs New Gas Supply Deal with German SEFESinopec Third-Quarter Profit Jumps 64% as Oil Prices Climb