An energy infrastructure truce that US President Donald Trump brokered between Russia and Ukraine could reduce one of the biggest immediate threats facing the global diesel market. But it is unlikely to reverse the severe supply crunch that has emerged this year.
On Monday, the Republican president said Ukraine and Russia had agreed not to attack each other's energy infrastructure. Ukrainian President Volodymyr Zelenskiy said in response that he wanted more details before halting strikes.
Even if the arrangement holds, the global refining industry, and diesel markets in particular, remain caught in the crossfire of two major conflicts that are unlikely to be resolved quickly.
In Russia, a years-long Ukrainian drone campaign targeting energy installations has crippled one of the world’s largest refining industries. In the first eight months of 2026, a Russian refinery was successfully hit on average every three days, according to the International Energy Agency.
In the Middle East, several refineries were damaged after the outbreak of the Iran war in February, as the blockade of the Strait of Hormuz severely constrained fuel exports. The Persian Gulf accounted for around a fifth of global seaborne diesel exports, or about 1.5 million barrels per day (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 two conflicts escalated, these regions accounted for almost 45 per cent of global seaborne diesel trade.
Diesel accounts for around 30 per cent of global oil demand and is widely seen as the lifeblood of the global economy. It 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. US retail diesel rose above a record $6 a gallon last week.
It is therefore unsurprising that Trump, who faces growing domestic discontent over rising energy costs and stubbornly elevated inflation, has sought to ease pressure on diesel markets.
The questions now are whether this “energy infrastructure ceasefire” will hold and how quickly the damage can be undone.
Ukraine's strikes on refining infrastructure deep inside Russia have had a profound economic impact on the world's third-largest refiner after China and the US.
Refinery crude processing runs fell to 8.7 million bpd in June, down 3.8 million bpd, or 30 per cent, from a year earlier, hitting the lowest level since May 2004, according to the IEA. Gasoline output in Russia has also dropped by around a fifth, causing severe shortages in some regions that have forced Moscow to import fuel. Russia has banned gasoline exports since April and diesel exports since July, with the latter restriction set to stay in place until September 30.
The diesel export ban has had a significant market impact. Russia was the world's second-largest diesel exporter after the United States last year, shipping more than 800,000 bpd, or roughly 12 per cent of global seaborne diesel exports, according to Kpler. Benchmark diesel prices have risen by 60 per cent since the ban was put in place.
A Ukrainian agreement to halt strikes on Russian energy facilities therefore appears significant at first glance, but it should be treated with a heavy dose of scepticism.
This is not the first energy infrastructure ceasefire agreed to by 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.
Moscow has yet to comment on Trump's latest announcement, while Kyiv has said it wants more details. Whether this purported agreement, if implemented, proves more durable remains to be seen.
But even if attacks on Russian refineries do cease, this is unlikely to materially improve the country's diesel production and export outlook in the coming months.
Many Russian 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 that sit at the heart of every refinery – as well as hydrocrackers, highly complex and costly installations that are essential for producing diesel.
Sourcing replacement equipment, or even temporary repair solutions, will be challenging for Russian refiners as Western sanctions continue to restrict access to specialised technology and components. Russian operators will also find themselves competing 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. That means 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.
Global refining throughput reached its summer peak of 81.4 million bpd in August, supported by near-record US refinery utilisation rates, but was still down 4.2 million bpd from a year earlier, according to the IEA.
This points to a broader problem for diesel markets. 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’s especially true because refineries in the Middle East remain at risk of attack after the recent expansion of the US-Iran conflict.
This means the world's most important fuel is likely to remain in short supply, and painfully expensive, well into next year.
In other words, even if Trump's truce succeeds in stopping further strikes, it cannot quickly undo the damage that has already been done.
(Ron Bousso; Editing by Marguerita Choy)