Russian Diesel Tanker Idles Off US Coast as Buyers Balk Despite Waiver

A tanker carrying the first US-bound cargo of Russian diesel sits idle off the US Eastern Seaboard, and experts say no American buyer is likely to take it — despite President Donald Trump's temporary waiver of sanctions on Moscow's fuel exports.

Banks will almost certainly refuse to finance US deals for Russian diesel, sanctions specialists said. Legal questions hang over whether the president's waiver can actually authorize the imports. And even a willing importer would face an operational headache: Russian diesel must be blended to meet US heating oil specifications.

What does the waiver actually allow?

Trump temporarily waived parts of a law that sanctioned Moscow after its invasion of Ukraine. Former President Joe Biden imposed those sanctions after the 2022 invasion, and Congress later codified them into law — which is why lawmakers from both parties objected last month to the rollback.

The plan targets diesel prices that spiked during the US-Israeli war on Iran. It would let Russia export 300,000 tons — 2.25 million barrels — of diesel to US and global markets immediately, followed by 500,000 tons in November and 1 million tons "immediately thereafter."

The price signal explains the urgency. US diesel averaged $6.13 per gallon on Wednesday, according to the American Automobile Association. That is down 20 cents from $6.33 on the October day Trump signed the waiver, but still up 63% from $3.76 before the US-Israeli war on Iran began in late February.

Will the cargo ever discharge at a US port?

The tanker halted its voyage off the East Coast this week, shipping data showed on Tuesday. Its operator said the destination has not been decided.

Energy Secretary Chris Wright, speaking Tuesday at an event in New Orleans, said he was confident the idled vessel would supply global markets even without a US berth. "We just want that diesel going into the world markets," Wright told reporters.

The US Treasury Department last month issued a general license temporarily permitting Russian diesel imports. But that license covers what lawyers call "prohibited but authorized transactions" — deals that remain legally fraught despite executive permission.

Jeremy Paner, a partner at Hughes Hubbard & Reed and a former US sanctions official, said any savings from cheaper Russian diesel could vanish under hundreds of thousands of dollars in legal fees from likely congressional investigations. "It's a relatively easy call for businesses to say, 'We don't want to touch it,'" Paner said.

How much political and legal risk do buyers carry?

Plenty. Dozens of US senators, including six Republicans, have urged Trump to rescind the deal, arguing it helps Russia fund attacks on Ukraine with no benefit to Americans. New Jersey Governor Mikie Sherrill, a Democrat, has warned port officials and terminal operators in her state against accepting Russian diesel, saying such shipments would break federal law.

A handful of statutes prohibit importing Russian oil products, analysts and lawyers noted. The UK and the EU maintain their own sanctions on Russian crude and fuel, complicating any trade financed or handled across those jurisdictions.

Representative Jamie Raskin of the House Judiciary Committee wrote to oil industry groups and the US Chamber of Commerce that importers would remain liable "long after the current administration leaves office," citing a 10-year statute of limitations. "Your members are now on notice that taking part in any effort to help President (Vladimir) Putin hawk Russian diesel in the US is a clear and dangerous violation of federal law," he wrote.

A Trump administration official insisted the waiver complies with all applicable laws. Finding a willing importer is another matter.

What happens to the cargo now?

David Tannenbaum, director of Blackstone Compliance Services and a former US Treasury sanctions specialist, said banks will steer clear because the trade could violate sanctions elsewhere. "The money that's on the table for a single deal in comparison to the compliance costs and potential headaches, I would be a hard pass," he said, noting that every party downstream touching the cargo is a potential subject of congressional investigation.

Natalia Losada, an analyst at Energy Aspects, said cargoes may end up diverting to Brazil or other traditional destinations for Russian diesel. Janiv Shah, a vice president at Rystad Energy, warned that the stalled first vessel sets a precedent: if it cannot dock or discharge at any US port, "that does create that bit of a hurdle for every further vessel that is on its way."

Unless Treasury's license survives mounting congressional pressure and a US importer steps forward, the 2.25 million barrels intended to cool diesel prices look set to land somewhere other than America.