Donald Trump has presented his agreement with Vladimir Putin as a means of reducing American fuel prices. Yet the Treasury authorisation extends far beyond the announced diesel shipments, opening opportunities for international trade in Russian petroleum products as American investors negotiate the acquisition of Lukoil’s overseas assets.

President Donald Trump’s decision to reopen trade in Russian diesel has implications extending well beyond American fuel prices. The agreement, announced ahead of November’s congressional elections, coincides with negotiations over Russian energy assets and mounting American pressure on Ukraine to suspend attacks against Moscow’s oil infrastructure.

The US Treasury’s General Licence 135, issued on 9 October, authorises transactions involving Russian-origin diesel until 7 April 2027. Unlike Trump’s public announcement, which referred to specific quantities destined for the American market, the licence establishes no corresponding volume ceiling or restriction confining authorised trade to the United States.

Its provisions permit American businesses to participate in eligible international transactions involving Russian diesel, including associated financial and commercial services. Existing sanctions remain formally in force, but an important category of Russian petroleum trade has been reopened.

The arrangement potentially benefits not only Russian producers but also American commodity traders, financial institutions and intermediaries capable of purchasing Russian fuel and distributing it internationally.

Sanctions relief without removing sanctions

The legal mechanism offers Washington considerable flexibility. Rather than formally abandoning restrictions imposed over Russia’s invasion of Ukraine, the administration can authorise selected transactions while maintaining the broader sanctions framework.

Congress’s Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 strengthened the legislative basis for economic pressure on Moscow but also provided presidential waiver powers.

General Licence 135 was issued under existing Treasury sanctions authorities, rather than necessarily through those waiver provisions. Nevertheless, the combined framework leaves the administration substantial discretion over the practical application of economic restrictions.

Washington can consequently maintain its declared sanctions policy while selectively restoring commercial relations with Russia. European governments, which have maintained extensive restrictions on Russian energy, have little influence over such unilateral American exemptions.

The Lukoil connection

The timing becomes more revealing when considered alongside negotiations over Lukoil’s international assets.

American investors have been exploring the acquisition of the Russian company’s overseas operations, including oilfields, refineries, storage facilities and retail distribution networks. The portfolio has been valued at approximately $20–22 billion.

Among the prospective investors is billionaire Todd Boehly, while discussions concerning Russian-American economic cooperation have involved Trump’s representatives Steve Witkoff and Jared Kushner.

An American-controlled acquisition of Lukoil’s international network could complement the commercial opportunities created by the diesel authorisation.

Russian petroleum products could potentially be purchased and marketed through American-controlled businesses, allowing Russian suppliers to retain export revenues while intermediaries earn profits from financing, distribution and resale.

No evidence establishes that General Licence 135 was specifically designed for the prospective Lukoil purchasers, or that Trump personally holds an interest in the proposed transactions. Nevertheless, the parallel negotiations suggest the possibility of an emerging commercial arrangement under which American intermediaries assume a greater role in Russian energy exports.

Ukraine and the conflict of interests

The consequences for Ukraine could be considerable.

Kyiv has expanded attacks against Russian refineries, fuel depots and petroleum infrastructure, seeking to reduce Moscow’s export earnings and disrupt supplies supporting its armed forces.

Trump has repeatedly criticised these strikes, linking them to higher international fuel prices. His administration now has an additional commercial reason to seek their suspension.

On 11 October, Trump announced an energy ceasefire between Russia and Ukraine, although President Volodymyr Zelenskyy indicated that Kyiv had not agreed to such an arrangement.

Ukraine has maintained that any suspension of attacks against Russian energy facilities must be matched by an end to Moscow’s strikes on Ukrainian power infrastructure.

An agreement protecting Russian refineries without equivalent Russian concessions would preserve an important source of Kremlin revenue while depriving Kyiv of military and economic leverage.

A separate accommodation with Moscow?

The immediate political advantage for Trump is apparent. Rising diesel prices have become a concern ahead of the 3 November midterm elections, particularly among farmers and transport businesses. Additional Russian supplies offer the administration an opportunity to demonstrate action on domestic fuel costs.

Yet the six-month Treasury authorisation extends considerably beyond the election, suggesting commercial objectives that cannot be explained exclusively by short-term electoral considerations.

The emerging pattern is one of bilateral economic engagement with Moscow proceeding independently of a settlement in Ukraine. Russian energy trade is being selectively reopened, American investors are pursuing Russian-owned assets, and Washington is seeking restrictions on Ukrainian operations against the infrastructure underpinning those commercial interests.

For European governments, this threatens the cohesion of the sanctions regime. Brussels may continue restricting Russian energy revenues while Washington authorises transactions that restore access to international markets.

The larger prospect is a system in which Russia retains export earnings, American intermediaries acquire profitable commercial positions, and sanctions become instruments of bilateral negotiation rather than coordinated Western pressure.

Trump’s diesel agreement may therefore represent the opening stage of a wider economic accommodation with Putin, negotiated while Russia continues its war against Ukraine and without any corresponding Russian commitment to withdraw from occupied territory.

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The EU should not accept any cuts to the proposed allocation of funds to defence and security in the next long-term EU budget, German MEP Marie-Agnes Strack-Zimmermann said in Strasbourg on Wednesday.

“Without security, we have no discussion anymore about anything,” the chair of the European Parliament’s committee on defence and security (SEDE) told the European Newsroom (enr) on the sidelines of Parliament’s plenary session.

The European Commission has proposed €131 billion for investment in defence, security and space under the European Competitiveness Fund in the EU’s 2028–2034 budget. This represents a five-fold increase compared with the current budget period.

Asked what compromise she would accept on the size, funding or allocation of defence spending to secure a budget agreement, Strack-Zimmermann said: “We need everything without compromises.”

The next long-term budget requires unanimous agreement among EU member states and the European Parliament’s consent.

Support for Ukraine

Strack-Zimmermann accused Russia of trying to deter European leaders from visiting Kyiv and undermine their support for Ukraine following attacks during German Chancellor Friedrich Merz’s visit last Sunday.

Asked about accelerating deliveries to Ukraine to defend itself against Russia’s war of agression, Strack-Zimmermann said funding was available but action required approval from national governments.

Ukraine needed humanitarian, military and economic assistance, including money to produce more weapons to protect its people, she said.

All in on SAFE

Strack-Zimmermann urged countries to move faster on joint defence procurement, backing the EU’s Security Action for Europe (SAFE) instrument.

SAFE provides up to €150 billion in competitively priced loans to member states aimed at accelerating large-scale investment in critical capabilities.

“We have more than 150 different weapons systems and to protect Europe we need this SAFE program,” the German politician said.

She said the programme had attracted interest both within and outside the EU. According to the European Commission, 19 EU member states have submitted defence investment plans, such as France, Italy and Poland, but not Germany.

The first non-European country to participate in SAFE was Canada, which concluded an agreement with the EU in June.

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