US issues license for Russian diesel imports

Following a telephone conversation between Donald Trump and Vladimir Putin on October 9, a new legal framework has been established for the trade of Russian diesel, including imports into the United States. Under General License 135, signed by OFAC Director Bradley T. Smith, the sale, delivery, and import of Russian-origin diesel are permitted until April 7 of next year. The license excludes transactions involving accounts held by the Russian Central Bank, the National Wealth Fund, or the Russian Ministry of Finance at American banks.

The agreement involves significant volumes, with initial commitments of 300,000 tons immediately, followed by 500,000 tons in November and an additional million tons shortly after. Depending on refinery capacity, up to three million more tons could be added. While Russian Deputy Prime Minister Alexander Nowak has suggested even higher volumes, production remains a concern as Ukrainian drone strikes have reportedly reduced Russian diesel production by approximately 30 percent.

Beyond the commodity itself, the license is significant for its impact on international finance. By allowing transactions through American financial institutions, it provides access to the US dollar settlement system, a mechanism the Kremlin has sought to bypass since 2022. Critics argue the deal provides Russia with billions of dollars in revenue that could fund its military operations, potentially undermining previous energy sanctions.