Trump's Ukraine Energy Truce Unlikely to Ease Global Diesel Crunch

An energy infrastructure truce brokered by U.S. President Donald Trump between Russia and Ukraine may remove one of the most immediate threats to the global diesel market, but it is unlikely to reverse the severe supply crunch that has built up this year.

Trump said on Monday that the two countries had agreed not to attack each other's energy infrastructure. Ukrainian President Volodymyr Zelenskiy responded that he wanted more details before halting strikes, while Moscow has yet to comment on the announcement.

Even if the arrangement holds, the refining industry and diesel markets remain caught between two conflicts that show little sign of a quick resolution.

Damage Already Done

A long-running Ukrainian drone campaign has struck energy installations deep inside Russia, crippling one of the world's largest refining industries. According to the International Energy Agency, a Russian refinery was successfully hit on average every three days in the first eight months of 2026.

Refinery crude processing runs fell to 8.7 million barrels per day in June, down 3.8 million bpd, or 30%, from a year earlier — the lowest level since May 2004. Gasoline output has dropped by around a fifth, causing shortages in some regions and forcing Moscow to import fuel. Russia has banned gasoline exports since April and diesel exports since July, with the diesel restriction set to remain until September 30.

Russia was the world's second-largest diesel exporter after the United States last year, shipping more than 800,000 bpd, or roughly 12% of global seaborne diesel exports. Benchmark diesel prices have risen by 60% since the export ban took effect.

In the Middle East, several refineries were damaged after the outbreak of the Iran war in February, and the blockade of the Strait of Hormuz severely constrained fuel exports. The Gulf accounted for around a fifth of global seaborne diesel exports, or about 1.5 million bpd, in 2025.

Combined, net diesel exports from Russia and the Gulf in August were 1.6 million bpd lower than in February. Before the conflicts escalated, the two regions accounted for almost 45% of global seaborne diesel trade.

Record Prices

Diesel accounts for around 30% of global oil demand and powers trucks, trains, ships, industrial machinery, mining equipment and farm vehicles. In Europe, it also fuels roughly four in 10 passenger cars.

The sharp drop in supplies pushed diesel prices and refining margins to record highs in August. U.S. retail diesel rose above a record $6 a gallon last week.

Trump, facing domestic discontent over rising energy costs and elevated inflation, has sought to ease pressure on diesel markets. The questions now are whether the ceasefire will hold and how quickly the damage can be undone.

Scepticism Warranted

This is not the first energy infrastructure ceasefire between Russia and Ukraine since Moscow launched its full-scale invasion in February 2022. In March 2025, Trump brokered a mutual suspension of strikes on energy facilities. Both sides accused the other of violating the arrangement almost immediately, and the deal never truly materialised.

Even if attacks on Russian refineries stop, the country's diesel production and export outlook is unlikely to improve materially in the coming months. Many facilities have been struck multiple times, including Gazpromneft's Moscow refinery and Rosneft's Ryazan refinery, so the accumulated damage is likely to be extensive.

Reports suggest the Ukrainian attacks often hit crude distillation units — the core processing units at the heart of every refinery — as well as hydrocrackers, complex and costly installations essential for producing diesel.

Sourcing replacement equipment, or even temporary repair solutions, will be difficult as Western sanctions continue to restrict access to specialised technology and components. Russian operators will also compete for limited engineering resources and equipment given the extensive damage to facilities across the Middle East.

Even if Russia succeeds in sourcing the necessary parts, repairs are likely to take months. Any meaningful recovery in Russian fuel exports, and any resulting relief for global diesel markets, is unlikely before next year under even the most optimistic scenario.

A Broader Problem

Global refining throughput reached its summer peak of 81.4 million bpd in August, supported by near-record U.S. refinery utilisation rates, but was still down 4.2 million bpd from a year earlier, according to the IEA.

The crisis is no longer simply one of disrupted oil supply but of damaged refining capacity. While emergency stock releases, higher oil production and the gradual recovery of flows through Hormuz have helped alleviate shortages of crude, restoring millions of barrels a day of lost refining capacity will be a far slower and more complex process.

That is especially true because refineries in the Middle East remain at risk of attack after the recent expansion of the U.S.-Iran conflict.

The world's most important fuel is therefore likely to remain in short supply, and painfully expensive, well into next year. Even if Trump's truce succeeds in stopping further strikes, it cannot quickly undo the damage that has already been done.