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US companies are unlikely to import Russian diesel despite the sanctions waiver, sanctions lawyers and analysts told Reuters on Wednesday, with the first cargo still idling off the East Coast. Banks are likely to refuse financing for such deals, both because of the legal question over whether the waiver is enough to allow the imports and because the trade could violate sanctions in other countries, said David Tannenbaum of Blackstone Compliance Services, a former Treasury sanctions specialist. Jeremy Paner, a Hughes Hubbard & Reed partner and former sanctions official, called the cargoes “prohibited but authorized transactions” and said likely congressional investigations could impose legal fees that wipe out any saving from cheaper fuel. Representative Jamie Raskin has written to oil industry groups and the US Chamber of Commerce warning that importers would remain liable under a 10 year statute of limitations, and dozens of senators, including six Republicans, have called on Trump to rescind the deal. The fuel carries a practical obstacle as well: Russian diesel would need blending to meet New York Mercantile Exchange heating oil specifications, Energy Aspects analyst Natalia Losada noted, and Rystad Energy’s Janiv Shah said a first vessel unable to dock raises the hurdle for every vessel behind it. The American Automobile Association put US diesel at 6.13 dollars a gallon on Wednesday, down 20 cents from the day of the October waiver but up 63 percent from 3.76 dollars before the war on Iran began in late February.
A third tanker carrying Russian diesel has turned away from the United States, moving away from the East Coast about 740 kilometres from New York, Bloomberg reported on Tuesday, citing port documents and vessel tracking data. Two earlier vessels abandoned their American routes, one heading towards Brazil and the other entering the Mediterranean. None of the cargoes has been delivered to the United States.
The Malta flagged Agioi Fanendes, carrying 40,000 tonnes of ultra low sulphur diesel loaded at Russia’s Baltic port of Primorsk on October 22, was expected in New York on November 7. Instead it slowed from about 10 knots to about 2 knots off the East Coast and changed its declared destination to for orders. Its Greece based manager, Eastern Mediterranean Maritime, told Reuters the vessel is still awaiting instructions because no unloading port has been confirmed. US Energy Secretary Chris Wright said on Tuesday he had no worries about the halt, and that the cargo would be sold in the global market: the ship will go to another port, and the aim is for the diesel to enter the world market.
The blockage is legal, not physical. Congress banned imports of Russian oil and petroleum products in the Ending Importation of Russian Oil Act of April 2022. On October 9 the Treasury’s Office of Foreign Assets Control issued General License 135, authorising transactions involving the sale, delivery, offloading and import of Russian diesel through April 7, 2027. New Jersey Governor Mikie Sherrill warned port and terminal operators in a November 2 letter that accepting Russian fuel could still violate federal law and expose them to civil and criminal penalties, and lawmakers have argued the licence cannot override the statute.
Trump announced the agreement with Putin on October 9, saying Russia would make more than 300,000 metric tonnes of diesel available immediately, followed by 500,000 tonnes in November and another 1 million tonnes thereafter. With US retail diesel at 6.17 dollars a gallon on November 9, down from 6.29 dollars a week earlier but still near record highs, the stalled cargoes leave the price relief the deal promised undelivered.