The Zhitong Finance App learned that a tanker carrying diesel had left Primorsk Port in Russia and intermittently indicated that the destination was New York. This could mark the first such shipments after Russian President Vladimir Putin reached a fuel supply agreement with US President Donald Trump.
According to the latest energy carrier tracking data compiled by ship flow tracking agencies, the ship, carrying nearly 43,000 metric tons of ultra-low sulphur diesel, left this Baltic Sea port on Thursday and is expected to arrive in the US on November 7. This batch of diesel is equivalent to slightly less than 320,000 barrels.
Trump and Putin reached an agreement earlier this month to launch Russian diesel on the global market. The White House is seeking to contain soaring prices before the November 3 midterm elections. The agreement sparked strong opposition from some US and European lawmakers. They said that it would increase the Kremlin's funding for the war against Ukraine, and that the scale of the agreement was too limited to have a substantial impact on prices no matter what.
Earlier this week, Russian Deputy Prime Minister Alexander Novak said that diesel shipments would begin on Thursday, but did not provide any details on the buyer or seller.
This will be the first batch of Russian refined oil products to arrive in the US since Russia fully invaded Ukraine in early 2022 and related imports dried up. After Trump spoke with Putin on the phone earlier this month, the US Treasury issued an exemption to allow Russian diesel to flow into the US until April next year.
The energy bailout ushered in Russian strength, and the inflection point in oil prices has yet to be realized in the supply of refined oil products
Russian diesel has resumed flowing to the US, opening up a new channel to ease fuel pressure, but this is not enough to confirm that international oil prices have entered a downward trend.
A tanker carrying nearly 43,000 tons and slightly less than 320,000 barrels of ultra-low sulphur diesel left the Russian port of Primorsk on October 22, intermittently indicating that the destination was New York. It is expected to arrive in the US on November 7. This may be the first batch of goods exported to the US after Trump and Putin reached a fuel supply agreement, but it is expected to arrive in Hong Kong later than the November 3 midterm elections.
Meanwhile, energy markets are still paying a premium for the risk of supply disruptions. The international crude oil price benchmark, Brent crude oil futures rose sharply by 4% to close at $113.17 on October 22; it hit $114.31 at around 18:00 Beijing time on October 23, hitting an intraday high of $114.72. Compared with $72.48 on February 27, before the outbreak of the Iran war, the benchmark price increased cumulatively by about 57.7%. The risk of attacks on Saudi energy facilities and regional shipping continues to offset mitigation expectations brought about by the restoration of supply.
The pressure on European gas was even more prominent: in early European trading on October 23, the Dutch TTF European gas futures benchmark contract rose 3.8% to 93.43 euros/megawatt hour, reaching the highest level since the end of 2022, with a weekly increase of nearly 7%. Compared to the pre-war offer of around 32 euros in recent months, the price level has almost tripled. The approach of winter, insufficient gas storage, and the risk of LNG transportation in the Middle East together maintain high prices; the increase in Russian diesel supply does not directly fill Europe's gas gap.
The real value of the agreement depends on whether Russia can continue to increase the supply of diesel available globally. The US Treasury Department has authorized the relevant Russian diesel deal until April 7, 2027, but the exemption itself will not repair damaged refineries, nor will it automatically reduce transportation costs. Energy tracking agency Kpler estimates that the global diesel supply gap is about 1 million b/d; if goods exported to the US are only transferred from other buyers to the US, the improvement in global supply and demand is limited. Only if refinery output, exports, and logistics resume together will it be more likely to continue to reduce production capacity shortages and premiums for important refined oil products such as diesel, and reduce transportation and heating costs.
From Russian Tankers to AI New Cloud Corporate Bond Yields: How Energy Cooling Can Open Up Financing Space
Naka Matsuzawa, a senior strategist at Nomura Securities, recently said that energy inflation may weaken the central bank's policy space to deal with credit constraints. Drawing on the credit cycle during the Internet and real estate boom, he sees the current credit pressure on AI companies and France as a partial shock, and suggests that it may escalate in the next one to two years. What is more valuable to the market is this transmission mechanism and chain: oil and gas continue to drive up costs and erode cash flow, while making it more difficult for central banks to quickly relax policies. Companies that are highly dependent on AI computing power financing (such as CoreWeave), which are closely linked to AI infrastructure, are under double pressure.
There have been changes in interest rate futures market pricing and US bond yield pricing. The market expectations set out in the Nomura report at the time were almost entirely taken into account in the US and Europe's December interest rate hikes; however, as of October 23, the corresponding probabilities for the US and Eurozone shown in the latest Reuters report had dropped to about 85% and 69%, respectively, and the yield on US 10-year treasury bonds had also returned below 5%. This decline in yield occurred at a time when oil prices continued to rise. It was mainly reflected in heightened economic growth concerns in the context of safe-haven demand and high inflation triggered by the collapse in global stock markets and commodities. It cannot be explained that energy inflation has been lifted.
Based on this deduction, a more favorable scenario for AI assets is that supply recovery drives down energy prices while economic demand and corporate orders remain resilient: falling transportation and production costs help mitigate inflation, improve cash flow, and reduce the need for further interest rate hikes. Subsequently, if the benchmark interest rate and corporate credit spreads fall together, the new financing costs for new cloud vendors and data center developers can only be expected to drop significantly. Russian diesel is a marginal variable on this path of improvement; what can really support the revaluation of technology stocks is that the restoration of the supply of refined oil products such as diesel gradually translates into a significant cooling of inflation, a sharp improvement in financing costs, and a stronger implementation of profits.