President Donald Trump's proposed diesel deal with Russia is putting downward pressure on US crude oil prices, with WTI briefly dipping toward $90 before recovering. The agreement involves Russia supplying over 300,000 metric tons of diesel immediately, followed by 500,000 tons in November, and additional shipments planned. The US has authorized Russian diesel imports under a temporary license extending through April 7, 2027.
US diesel futures fell nearly 5% following the announcement, while the diesel crack spread against WTI crude declined by $6.45 per barrel. Although the deal's direct impact on crude oil is uncertain, lower diesel prices could squeeze refinery margins and reduce demand for crude. The bearish impact on WTI will depend on the volume of fuel delivered and whether it significantly changes market conditions.
Tensions involving Iran and the Strait of Hormuz remain a critical factor for crude oil prices, as disruptions could offset some of the downward pressure from the Russian diesel arrangement. WTI settled Friday at $91.85 per barrel, up 0.39%, while Brent crude closed at $104.72, gaining 0.42%. The recovery suggests traders have not fully priced in a sustained decline in crude oil.
Looking ahead, the $90 level is the immediate test for WTI. A sustained break below $90 could expose $88, followed by $83, $85 if selling continues. If buyers defend support, WTI could rebound toward $95, $100. A confirmed break below $88 would provide a stronger signal of further downside.