The Journal's photo shows a trucker in Miami filling his rig with diesel. On Friday the national average was $6.28 a gallon, by AAA's count. A year ago it was $3.68. The same day, President Trump announced a deal with Russia. Moscow supplies diesel, and Washington waives its sanctions on Russian diesel for six months.
Trump laid out the schedule on Truth Social. Russia would ship over 300,000 tons at once, 500,000 more in November and 1 million right after. He said 3 million more could follow “within a short period of time,” depending on the state of Russia's refineries. Russia counts diesel in tons. The Journal puts it all near 36 million barrels. Treasury's sanctions office issued a temporary license the same day. It waives select U.S. sanctions on Russian diesel sales until April.
Here's the hole it's meant to fill. Refineries are offline in the Middle East and in Russia. The International Energy Agency said last month that the world is short about 1.6 million barrels of diesel a day. Even if every promised barrel landed at once, the Journal says, it would cover that gap for about three weeks. Diesel futures rose 5.27% for the week. And the paper gives real reasons to doubt the schedule. Ukraine's strikes have hit six refineries that make about half of Russia's diesel. Russia itself halted diesel exports this year and extended that halt to Oct. 31. Andy Lipow of Lipow Oil Associates in Houston says he can't tell how much extra supply the world actually gets.
Three weeks of relief, on paper
The paper gives both sides. Trump wrote that lower prices for farmers, ranchers and truckers come first for him. Ukraine's President Volodymyr Zelensky warned that easing sanctions plays into Putin's hands and pays for a longer war. Rep. Michael McCaul, a Texas Republican, said he understands the goal but worries the waiver funds the Kremlin's war. Clayton Seigle of the Center for Strategic and International Studies figures Russia could export more than 100,000 barrels a day under it. That's a sliver of a 1.6 million-barrel daily gap.
Valero (VLO) touched a 52-week high of $449.77 on Friday and closed at $433.75, down 10.05, or 2.3%. Marathon Petroleum (MPC) and Phillips 66 (PSX) also hit 52-week highs and closed lower. The Journal doesn't tie those moves to the deal, and we won't either.
Our read
Investments and Risk (IN04). Here's the one move the desk made this weekend. It's the desk's decision for its own model books, and it's general information, not a recommendation. Valero (VLO) sits in 12 of our 81 model books. We first bought it Sept. 28 at 1.5%. On Sunday, Oct. 11, the desk bought more. It raised Valero to 3.0% from 1.5% in ten of those books, the four Tactical books and the six energy-theme books. The other two stay at 1.5%. We paid for it inside the energy sleeve, the slice of each book set aside for energy stocks. We trimmed the other energy holdings in those ten books in proportion, so each book's total energy weight didn't change. No new money went into stocks.
The written sell rule didn't move either. It says we trim Valero if the White House publishes a restriction on diesel exports. Friday's deal is the opposite kind of step. It adds supply by waiving sanctions. So the trigger hasn't fired, and a rule that bends on the first surprise isn't a rule. The stock fell 2.3% Friday, and one day's price isn't the trigger either. The policy is. If you own energy, through a fund or a single stock, check what you actually hold and write down what would make you sell it. The umbrella is easier to find before the rain starts.