6JUL

OFAC opens US market to Russian diesel

3 min read

09:40UTC

The US Treasury licensed Russian diesel for American buyers until April 2027, on the day Trump and Putin spent an hour and a half on the phone.

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EconomicAssessed

Key takeaway

Washington opened its market to Russian diesel while keeping Moscow's sovereign accounts frozen.

The US Treasury's Office of Foreign Assets Control (OFAC) issued General License (GL) 135 on 9 October, a blanket exemption from sanctions for one class of trade. It authorises the sale, delivery, offloading and importation of Russian-origin diesel, "including importation into the United States", until 7 April 2027⁠¹. OFAC Director Bradley T. Smith signed it under the Treasury's existing Russia sanctions regulations.

It landed on the day Donald Trump and Vladimir Putin spoke by telephone for about an hour and a half. Reuters reported that the two leaders agreed Russian diesel supplies to American and world markets, and the Kremlin said Russia had "confirmed its readiness to supply oil and petroleum products to the American and global markets"⁠².

GL 135 keeps one door shut. Paragraph (b) bars any debit to US-held accounts of the Bank of Russia, the Russian National Wealth Fund and the Russian Finance Ministry⁠³. In practice American buyers can pay Russian sellers, but nothing moves out of Moscow's blocked sovereign accounts.

The licence covers one product for six months. Washington's waiver for Russian crude has stayed lapsed since mid-June, so oil itself remains outside the licence. Kaja Kallas, the European Union (EU) foreign policy chief, wrote on X on 10 October: "This is not the time to ease pressure on Russia, and Europe won't." TASS, the Russian state news agency, relayed the post⁠⁴.

Deep Analysis

In plain English

The United States bans most trade with Russia. Its Treasury can make exceptions, called general licences, that allow one kind of deal for a set time. On 9 October the Treasury made such an exception for diesel, the fuel used by lorries, tractors and ships. American and other buyers can now buy Russian diesel until April 2027. The exception has a limit. Money cannot be taken out of Russia's government and central bank accounts that are frozen in the US. Europe's foreign policy chief said the EU will not copy the move.

Deep Analysis

Root Causes

The Graham Act set a 30-day clock on 18 September. By about 18 October The White House had to tariff the biggest buyers of Russian oil, India and China among them, or certify a waiver to Congress. A licence under the older Russia sanctions regulations (parts 587 and 589 of Title 31 of the US Code of Federal Regulations) lets Washington ease one product without touching that clock.

Moscow had a product to sell. Russia's producer export ban, first imposed on 8 July , had bottled diesel up at home, and Novak now says the domestic market is fully supplied. A sanctioned seller with surplus fuel needs a buyer whose dollar payments clear, and only an OFAC licence provides that.

The carve-out in paragraph (b) reflects the one asset Washington has kept frozen since 2022: Russia's sovereign reserves. Keeping those accounts shut preserves the bargaining chip for a settlement while trade reopens.

What could happen next?

Precedent
Washington has shown it will license a single Russian fuel product without a ceasefire, which other sellers and buyers will test for crude.
Short term · Assessed
Risk
A US-EU split on Russian energy gives Moscow a market in one bloc while the other keeps its ban, weakening joint enforcement on tankers and insurers.
Medium term · Reported
Consequence
The 7 April 2027 expiry becomes a recurring bargaining date, as monthly rollovers of other OFAC licences already are.
Medium term · Reported

Source Landscape

This story draws on neutral-leaning sources from Russia (includes Russia state media)

Russia

Primary parallel: OFAC's General License 41 of November 2022 let Chevron resume pumping Venezuelan crude while barring taxes, royalties and dividends to the Venezuelan government and its state oil company, PDVSA. GL 135 copies that design: licensed barrels, blocked sovereign cash.

Counter-parallel: General License 44 of October 2023 opened Venezuela's whole oil sector for six months in return for Nicolás Maduro's promise of a competitive election. OFAC let it lapse in April 2024 when the promise failed, so a six-month licence bought no lasting concession.

Immediate effect: GL 135 covers diesel only. The separate crude waiver, General License 134C, lapsed on 17 June and has not been renewed, so Russian crude still moves through the shadow fleet while its diesel can now be invoiced and insured through Western channels.

Structural effect: a six-month licence gives traders an end date to price against. Long-term charters, insurance and refinery supply contracts usually run longer than six months, so buyers carry the risk that OFAC lets the licence lapse on 7 April 2027, as it did with the crude waiver.

Consensus view: OFAC's own text draws its line at money rather than fuel. Paragraph (b) of General License 135 lets buyers pay Russian sellers but bars any debit to US-held accounts of the Bank of Russia, the Russian National Wealth Fund and the Russian Finance Ministry. The Kremlin's readout of the 9 October call says Moscow "confirmed its readiness to supply oil and petroleum products to the American and global markets", so both capitals present the licence as trade rather than relief.

Counter-view: Kaja Kallas, the EU's foreign policy chief, wrote on 10 October that suspending sanctions on Russian diesel "provides Moscow with more revenues". On her reading the sovereign carve-out is beside the point, because fresh export sales reach Russian producers and, through their taxes, the federal budget.

Key tension: Whether a licence issued under OFAC's existing Russia regulations counts as relief under the Graham Act, whose own waiver needs a written certification to Congress that The White House has not published.

First Reported In

Update #28 · US licenses Russian diesel and turns on Kyiv

US Treasury OFAC· 12 Oct 2026

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Causes and effects

Caused by

Urals crude nearly triples in weeks

The US crude waiver stayed lapsed while OFAC opened a separate licence for Russian diesel.

Occurred 23 Jul 2026

Read story →

This Event

OFAC opens US market to Russian diesel

Washington eased sanctions on a Russian energy product on the day of a Trump-Putin call, while Europe said it would hold its line.

Led to

Novak lifts Russian diesel export curbs

Novak announced diesel export volumes the day after the Trump-Putin call and the US licence.

Occurred 10 Oct 2026

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Zelenskyy ties elections to a ceasefire

Zelenskyy criticised General License 135 and set terms for halting refinery strikes the same day.

Occurred 11 Oct 2026

Read story →

Different Perspectives

Cross-border power traders

The France-Germany day-ahead spread flipped from a EUR 17.20 German premium on 1 August to a EUR 4.15 French premium on 3 August, the same day French curtailment peaked. They cannot yet attribute the flip to curtailment alone, since a like-for-like overnight comparison shows French nuclear output rising while wind fell and demand returned on the weekday step.

EDF

River-cooling limits took 7.6 GW, 12 per cent of its fleet, offline on 3 August, the highest curtailment since the heatwave began, with an easing forecast to 4.3 GW on 4 August and 3 GW after. It manages the cut as a recurring seasonal constraint, expecting it to lift with river temperature, not repair.

Gasunie

TTF, the Dutch hub it operates, drifted to roughly EUR 55 to 58 per MWh across the window, staying inside its recent range through both the German spark reversal and the French curtailment. It reads a flat hub price as evidence that neither event this window carried enough weight to move the fuel leg on its own.

German gas-fired generators

Record German solar of 18,761 MW on 2 August pushed the clean spark spread to minus 18.48 EUR/MWh, a loss-making day, before it returned to plus 16.20 on 3 August. They now price dispatch against post-solar residual load rather than wind alone, since the sign flipped inside 48 hours on unchanged fuel and carbon costs.

European Commission (DG Energy)

Its implementing-measures register logged transposition notices from only Portugal and Slovakia against Wednesday's Article 94 deadline for Directive (EU) 2024/1788, with 25 states silent. It expects the register to fill only gradually, since filing routinely lags legislating and any infringement track against non-notifying states runs on a slower clock than the deadline itself.

Spain's LNG terminal operators

Spain's 9,145 GWh terminal inventory is the largest single stock in the EU LNG network, an option value that can reroute cargoes wherever the winter strip pays best rather than a cavern gas obligation tied to a fixed date. That flexibility matters more as Germany's cavern shortfall pushes more of the winter security question onto import infrastructure.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.