Russia’s diesel exports partly reopened on 10 October. Moscow eased its own ban a day after Washington issued a licence allowing trade in Russian diesel.
Here’s the catch. The International Energy Agency (IEA) says the easing is unlikely to change the world diesel balance much, because the limit is Russia’s damaged refineries.
Why does that matter here? Australia’s wholesale diesel price follows Singapore’s, and it averaged 263.3 cents a litre in the week to 9 October. That’s about 28% above its average over the past year.
Let’s look at what’s changed, why supply is still tight, and how it flows through to prices here.
What happened
On 9 October President Donald Trump said Russia had agreed to supply diesel to global markets, and his administration temporarily lifted US sanctions on Russian diesel. The US Treasury’s General License 135, a formal permission, authorises the sale, delivery and import of Russian-origin diesel until 7 April 2027. The licence covers diesel only, not sanctions on Russia generally, and it can be revoked.
A day later, Moscow partially lifted its own ban on diesel exports, in place since July, allowing 500,000 tonnes to go to the world market. Russia’s ban still applies until the end of October for countries without a supply agreement with Moscow, so the opening is partial.
What’s been promised, and what’s moved
Trump said Russia would supply more than 300,000 tonnes immediately, a further 500,000 tonnes in November and another million tonnes after that.
Russia’s Deputy Prime Minister Alexander Novak went further, telling reporters that exports could reach 3.0 to 3.5 million tonnes a month by the end of the year, back to the levels seen before the crisis. Before Ukraine’s drone campaign against Russian refineries, Russian diesel exports were more than 3 million tonnes a month, and Russia is usually the world’s second largest diesel exporter after the United States.
According to Reuters, citing US Energy Information Administration data, the first 300,000 tonnes is less than one day of what the US transport sector uses. The Kremlin said on 15 October that diesel had started reaching world markets, and a 40,000 tonne tanker loaded at Primorsk for Morocco, according to The Moscow Times, citing Reuters and LSEG data.
Why more exports may not mean more diesel
The International Energy Agency (IEA) explains why in its October Oil Market Report: what holds back Russia’s exports is a lack of working refinery capacity, not the ban.
The IEA’s September commentary said a Russian refinery was hit on average once every three days in the first eight months of 2026, and that serious damage to the more complex refinery units that turn crude into fuels can take six to eight months to repair. It lowered its forecast for the crude Russian refineries process to about 4 million barrels a day for the rest of 2026 and for 2027, and estimated Russian diesel output had fallen by nearly 30 per cent.
The strikes have continued. Reuters reported that on 15 October, six days after the US licence, Ukraine struck the Ryazan refinery after President Volodymyr Zelenskiy said Kyiv was abandoning an energy ceasefire, and that Ryazan suspended its main crude processing unit, citing industry sources.
How tight the market is
The IEA says combined diesel exports from Russia and the Middle East were 1.3 million barrels a day lower in September than a year earlier, down more than 60 per cent. Diesel stocks were drawn down at the time of year they normally rise, and the IEA says oil stocks held on land are at their lowest since at least 2016.
The IEA says diesel tightness extends into 2027, and that refilling the lost stocks is unlikely before the second half of 2027. It expects higher refinery output to return the diesel market to a surplus in the first quarter of 2027, but not by enough to offset this year’s deficit.
Russia is not the only pressure. Reuters reported that the Houthis hit Saudi Aramco’s headquarters on 13 October and vowed more attacks, and the IEA says the escalation in attacks on regional energy infrastructure threatens the Gulf’s recovery. Wholesale diesel topped 200 US dollars a barrel in Singapore in mid September, and even after easing, the IEA says benchmarks remain nearly double the price of crude oil.
How it reaches Australian prices
The Australian Institute of Petroleum (AIP) says Australia’s refining sector has to accept world prices, and that the Singapore benchmark, a reference price for diesel, is the key diesel price benchmark for Australia, and that the Singapore price plus shipping costs and Australian taxes is almost the entire wholesale price, around 95 per cent. Changes in Singapore generally reach Australian prices within one to two weeks.
The wholesale price at the fuel terminal, called the terminal gate price, shows the effect. In the week to 9 October the national average diesel terminal gate price was 263.3 cents a litre, against a 12 month average of 205.2. The national average pump price was 283.0 cents, against 223.4. Singapore’s wholesale diesel price itself averaged 153.6 Australian cents a litre that week, against 121.8 over the previous year.
Businesses that use diesel pay that cost. NAB’s September business survey put confidence at minus 13, down 4 points, and named elevated fuel and diesel costs as one of three pressures, alongside higher interest rates and global uncertainty. Trucking, mining and farming are among the heaviest users, so diesel is a large cost line for them.
The IEA also says record diesel prices are already raising the cost of goods and feeding into inflation, and it forecasts world oil demand to fall by 2.6 million barrels a day this year, with diesel a quarter of that drop.
What to watch
The next marker is the IEA’s November Oil Market Report, due on Friday 13 November 2026, with its updated count of world stocks.
If Russian diesel ships but stocks keep falling, the IEA’s view that diesel stays tight into 2027 would hold, and the gap between promised and delivered volumes remains the story. If stocks rise faster than the season explains, the rebuild the IEA expects in the second half of 2027 could come forward.
On the supply side, the IEA’s governing board agreed on 15 October to speed up its emergency stock releases, including more than 20 million barrels of diesel as soon as possible. About 330 million of the 400 million barrels pledged in March are already out. For scale, the IEA puts world diesel use at 28.7 million barrels a day, so 20 million barrels is less than one day of demand.
Crude is moving too. Brent, the global oil benchmark, touched 110 US dollars a barrel on 16 October for the first time since May, Reuters reported, on Middle East tensions and doubts about how much diesel Russia can deliver.
For Australia, the AIP publishes terminal gate prices each weekday and a weekly diesel report, which show how quickly Singapore moves are reaching local prices.
Frequently asked questions
Why are diesel prices in Australia so high?
Australian diesel is priced off the Singapore benchmark, which the AIP says, with shipping and taxes, makes up around 95 per cent of the wholesale price. The national average terminal gate price was 263.3 cents a litre in the week to 9 October, against a 12 month average of 205.2, as global supply stays tight.
Will Russia’s diesel exports bring prices down?
The IEA says the easing is unlikely to change the world diesel balance much, because damaged Russian refineries limit what can be exported. Moscow has cleared 500,000 tonnes for export so far, against Novak’s statement that exports could reach 3.0 to 3.5 million tonnes a month by the end of the year.
How long will the diesel shortage last?
The IEA says diesel tightness extends into 2027. It expects the market to return to a surplus in the first quarter of 2027, but not by enough to offset this year’s deficit, and does not expect lost stocks to refill before the second half of 2027. Its next report is due on 13 November 2026.
