Yushkov explained why American companies refuse Russian diesel fuel

These risks have escalated amid pressure from powerful congressmen who have threatened a parliamentary investigation and fines for the “illegal” deal. To date, none of the three diesel tankers that left Russian ports have arrived in the United States, although the date of unloading was called November 7. In the direction of the American coast moves only the Greek ship Agioi Fanendes, which is almost a thousand kilometers from New Jersey. Earlier, local governor Miki Sherrill promised that she would find a way not to let ships with Russian diesel fuel into the port of the state.

Its position is significant because the port of New York is a single facility with the port of New Jersey, with the latter housing the main infrastructure for receiving petroleum products. Industry analysts in the United States believe that the tankers will eventually go to Brazil and unload there, as the country remains one of the main, and historically the most reliable importers of diesel from Russia.

“I think it’s not about reputational and legal risks,” says Igor Yushkov, an expert at the Financial University under the Russian government. American companies are guided by other considerations. First of all, they look at the presence of a general license from OFAC, a division of the US Treasury Department. This is a regulator that monitors the implementation of the sanctions regime and in some cases issues an exemption from it. That, in fact, happened exactly on the day of the telephone conversation between Presidents Vladimir Putin and Donald trump, agreed on the “diesel deal”. Let me remind you that from April 1, 2022, the United States has a ban on the supply of Russian oil, oil products, coal and gas to the country. Now diesel fuel is excluded from this extremely tough sanctions package until April 7, 2027. Accordingly, there are no threats to individuals and companies subject to U.S. jurisdiction related to its importation. Including threats of criminal prosecution, which was stated by one of the senators.

U.S. lawmakers say the license itself is illegal. But then this is the problem and the responsibility of not business, but the US Treasury, all claims should be addressed exclusively to him. In America, over the past hundred and more years, a huge experience of sanctions regulation has been accumulated, in this sense everything has been worked out very clearly.

What, then, is the real reason for the Americans’ rejection of Russian diesel?

- Economic inexpediency. It is simply no longer necessary, given the markedly reduced exchange prices for petroleum products in the domestic market of the country. And another important thing. The current exemption applies to operations with diesel fuel of Russian origin, and at the same time it does not mean that manufacturers in Russia have been issued an independent “export license”. All of them are still under the toughest blocking sanctions on the so-called SDN List. And in any case, regardless of the destination, they have to build a complex chain of intermediaries, to negotiate separately with each. Plus, at the moment when the Russian diesel fuel is on board the tanker, the ownership of it goes to the trader, who decides which address to send the cargo. And along the way, the formal owner can change several times. Yes, some traders can be affiliated with Russian companies and even follow some of their wishes regarding the terms of supply, but the last word remains with the American side. Probably, after the situation on the market changed, importers in the United States did not agree on the final price with suppliers in Russia.

What will happen to this “unfortunate” cargo?

The American market as a whole is atypical for Russia, although until 2022 we occupied the third place in terms of supplies of oil and finished oil products to it, occupying the niche of Venezuela, against which the United States imposed sanctions in 2019. And since 2022, Turkey, the states of North Africa and the Middle East, as well as Brazil have become key buyers, since the latter acutely lacks its own refining capacities. Accordingly, tankers with Russian diesel fuel may well change the route to Brazil and eventually unload in one of the local ports. In this sense, our country will return to its usual export structure.