US authorises Russian origin diesel transactions under General License 135
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US authorises Russian origin diesel transactions under General License 135
Members are advised that the United States has temporarily lifted its own sanctions barrier to trade in Russian origin diesel as a measure aimed at global fuel supply. The licence opens a gap between US and European rules rather than a new trading channel for European service providers, and the Club, as an EU operator, will continue to apply EU and UK restrictions in full.
On 9 October 2026 OFAC issued Russia related General License 135. It authorises all transactions prohibited by the Russian Harmful Foreign Activities Sanctions Regulations (31 CFR part 587) or the Ukraine/Russia Related Sanctions Regulations (31 CFR part 589) that relate to the sale, delivery, offloading or importation, including into the United States, of diesel fuel of Russian Federation origin. It runs until 12:01 a.m. eastern daylight time on 7 April 2027 and excludes debits to accounts at US financial institutions of the Central Bank of the Russian Federation, the National Wealth Fund and the Ministry of Finance. It contains no wind down provision and OFAC has issued no accompanying guidance.
The licence is being presented as a supply measure rather than a change in the wider US sanctions posture towards Russia. Treasury stated that it was issued at the President’s direction to allow Russian diesel to reach the global market. It followed a call between the US and Russian Presidents on 9 October, after which the US President announced that Russia had agreed to supply more than 300,000 tonnes immediately, a further 500,000 tonnes in November and 1,000,000 tonnes thereafter. Diesel prices reached record levels in the United States and Europe in September, with supply disrupted by the near closure of the Strait of Hormuz, attacks on Gulf and Red Sea energy infrastructure and strikes on refineries in Russia and Ukraine, and the G7 has already agreed a coordinated release of emergency reserves.
The Russian side of the arrangement is equally supply driven. Russia had banned diesel exports in July 2026 after damage to its refining sector, and on 10 October partially lifted that ban to permit the sale of 500,000 tonnes to foreign markets, with its Deputy Prime Minister stating that domestic supply would not be affected.
The first effect is a regulatory divergence. US persons and US financial institutions may now deal in Russian diesel transactions within the terms of the licence, and US ports may receive the product, while EU and UK prohibitions remain unchanged. The ordinary wording of the licence appears capable of covering Russian diesel transactions involving blocked persons or otherwise restricted by the US price cap. This is because it authorises all transactions prohibited under Part 587 that relate to the sale, delivery, offloading or importation of Russian origin diesel, and Part 587 is also the regulatory framework through which those blocked-person restrictions and price cap determinations are implemented. OFAC has not, however, confirmed that the licence should be read this broadly. If it does extend that far, the United States will no longer be applying the price cap to Russian diesel for the life of the licence, while EU and UK operators remain bound by it.
The second effect is on how the trade is shipped. Because European service providers remain restricted, cargoes moving under the licence are likely to be carried and serviced outside EU and UK jurisdiction, or by operators relying on US authorisation alone. Members should expect more Russian product loadings from Baltic and Black Sea ports heading across the Atlantic, more fixture enquiries premised on the licence, and greater reliance on ship to ship transfers and documentation that will require close scrutiny. Early reporting already traces a product cargo from St Petersburg towards the US East Coast. Loadings in the Black Sea and Sea of Azov also carry the war risk exposure.
The third effect, on price, is likely to be modest. Market commentators have doubted whether the announced volumes are deliverable given Russia’s refinery constraints, which may be compounded by Ukraine’s continuing campaign against Russian energy infrastructure, particularly oil refineries. Any further disruption to refining capacity could constrain diesel output and export availability notwithstanding the US authorisation. The announced volumes are also small against US consumption of roughly 3.7 million barrels of diesel per day
Finally, the licence is fragile. It is time limited and revocable, it sits in tension with the Ending Importation of Russian Oil Act of 2022, and a bipartisan group of US senators has called for the arrangement to be cancelled on that basis. EU foreign ministers have stated that EU sanctions will continue to apply, and Australia has indicated that it will not purchase Russian fuel. Trades concluded in reliance on the licence therefore carry a real risk of being overtaken by revocation, amendment or legal challenge before they are completed.
Of course, the licence does not amend Regulation (EU) No 833/2014 or UK law. Article 3n continues to prohibit the transport of Russian petroleum products to third countries, and related financing or financial assistance, which Article 1(o) defines to include insurance, unless the cargo was purchased at or below the Annex XXVIII cap, which for diesel is USD 100 per barrel. Article 3n(7) continues to withdraw services for 90 days from a vessel that has knowingly carried above cap cargo, and Article 3s(1) continues to bar insurance and other services to any vessel listed in Annex XLII.