The U.S. Tried to Choke Russia’s Energy Market. Then It Made a Diesel Deal.

From New York Times, I'm Natalie Kitchrow-F. This is The Daily. After years of American sanctions on Russian oil and gas, President Trump has just announced a deal in which the United States would buy billions of dollars in diesel from Russia. Trump claimed the move would lower fuel prices, but it stunned U.S. allies and lawmakers in Washington, who warned that the American government was handing Putin a lifeline. Today, my colleague Anton Troyanovsky explains what the deal reveals about Trump's changing strategy with Russia and how much it could actually help American consumers. It's Wednesday, October 14th. Anton, welcome back to The Daily. We love having you here. Good to be here. Thank you, Natalie. So, on Friday, we learned that the American government is now reversing years of U.S. policy and is going to be buying Russian diesel, which is something that the U.S. had not been doing because we were told that money could fund Russia's war machine. And we learned that all this is in service of lowering gas prices at home. This news was received, I think, as a total shock around the world. Can you just start by saying how big of a deal this actually is? Yeah. Absolutely. So, Friday's news was a really stunning reversal because it was the president saying we have agreed with Russia that the Russians will immediately supply 300,000 tons of diesel to U.S. and world markets, and even more after that, without even saying that this was part of some kind of broader deal to de-escalate this war in Ukraine that's now gone on for four and a half years and killed hundreds of thousands of people. Okay. So, how did this happen, Anton? Lay out for me how exactly we got here. Well, let's go all the way back to the 2024 election campaign. You remember one of Trump's main campaign promises was to end the war in Ukraine. He said he was going to do it in 24 hours. That did not happen. That did not happen. But Trump's friend and now peace on voice, Steve Whitkopf, started early on in February of 2025, regularly going to Russia, meeting with Putin, speaking to other Russian officials about trying to end the war. And one primary prong of the U.S. approach has been talking about business deals with Russia. Basically, making the argument that, look, if only this war was over, we could do all these great things together and our countries could make lots of money. Essentially, let's end this war and we can all profit off of that. Exactly. But the problem was that didn't work. For Putin, economics matter, but he clearly didn't start this war in Ukraine to make more money. What Putin cares about is territory. He wants more of the Eastern Ukrainian region called the Donbass. What Putin cares about is the kind of control he'll be able to exercise over the rest of Ukraine after the war ends. And what he cares about are these big geopolitical issues of what does the future relationship between Russia and NATO look like, where are Western troops located in different parts of Europe? It's this big kaleidoscope of issues for Putin, of which economics are really just a part. And as a result, this effort of dangling deals in front of Putin with the hope that this will get him to compromise has not borne fruit. Then, layer on top of that, the fact that the Iran war starts in February of this year. And that makes things even more complicated. And part by raising energy prices around the world. Russia, of course, is one of the world's biggest exporters of both oil and gas. And that gives Putin new cards to play, which puts these negotiations about potential energy deals with the Russians into a different light. Because suddenly, it's now the US that's looking for ways to lower energy prices. And especially right now, as we have these midterm elections coming up, you might start to see that pain that American consumers are feeling translate into votes. Exactly. So you see the administration thinking about all kinds of ways to try to reverse this spike in fuel prices. And then at the same time, you have the Ukraine war escalating. Ukraine says Russia has carried out a steadfast attack of the year. At least 33 people were killed. Russia attacked a Ukrainian power plant, the war getting bloodier. In particular, Russian strikes on Ukrainian infrastructure. Ukraine says it has struck a Russian oil refinery near Moscow in Ukraine, responding by hitting Russian oil refineries. New video shows massive explosions that thick smoke pouring from an oil refinery just 10 miles from the Kremlin. At some point they get something like half of Russian oil refining capacity offline. The blaze halted production, putting more pressure on the country's already strained oil infrastructure. And there were gas lines at Russian gas stations. And Russia had to implement an export ban for diesel this past July. Meaning if Russia is banning exports, there's less diesel in the global market. And so prices presumably go up again. Yeah, that's right. And so the Trump administration has tried to push the Ukrainians to stop those attacks on Russian refineries. And the Ukrainians have responded that they're happy to do so if it's part of a mutual cessation of strikes on each other's energy infrastructure. So the Ukrainians have been saying, yes, we are willing to stop hitting Russian oil refineries if the Russians stop hitting our energy infrastructure. And that hasn't happened. Nevertheless, the administration has continued to put pressure on the Ukrainians. And there has clearly been frustration on the part of the president and top officials in the administration that the Ukrainians haven't agreed to unilaterally stop those refinery strikes. So leaning on Ukraine doesn't work. Correct. So as we've seen this Trump administration frustration with Ukraine increase, we've also seen their approach to Russia shift, specifically on this question of business deals. So previously, President Trump had said we're happy to do business with Russia, but only once the war ends. Right now in recent months, according to our reporting, the message has evolved to we are willing to consider deals with Russia before the end of the war. Because one of the things that folks in the administration who are working on this are worried about is that Putin and the Kremlin might not believe that the Trump administration is really ready to change course and enter into a new kind of more friendly relationship with Russia. The idea here is that the Trump administration wants to signal very clearly to the Russians. We are serious about the rewards of cooperating with us. This is what it could look like. This is how good it could be for you. Yes, precisely. So that's why even just in the last couple of months, Jared Kushner and Steve Whitkov, the main envoys for the Russia Ukraine war in the White House, have been speaking to the Russians more seriously about potential business deals. So it sounds like everything is converging in this moment, the effort to end the war in Ukraine, the evolving strategy about how to do that, the energy crisis as a result of the Iran war and the midterms. All this is coming to a head at the same time. Yes, and that brings us to Friday in Florida outside Miami at a golf resort called Shell Bay owned by Steve Whitkov. Whitkov and Jared Kushner were meeting with senior officials from Europe and from Ukraine who had flown in for another round of talks about the war. And early on in that meeting on Friday, the Americans made an announcement that stunned the Europeans and the Ukrainians. President Trump was about to reveal a deal with Russia to lift sanctions on Russian diesel. That became official a few hours later. Trump spoke on the phone with Putin and then on his truth social account said, President Donald Trump says he struck a deal to obtain diesel from Russia. He had a highly successful discussion with Putin. Russia will immediately supply over 300,000 tons of diesel fuel. That Putin had agreed to supply 300,000 tons of diesel to the world immediately. Another 500,000 tons during the month of November. And potentially millions more in the coming months depending on the state of Russian oil refineries and at the same time the Treasury Department put out a statement that was basically temporarily suspending sanctions on Russian diesel. Meaning not only is the U.S. going to buy diesel from Russia, the U.S. government is also saying it's not going to punish anyone else for buying diesel from Russia. Everyone can do it now. That's right. Okay. That seems like a major U-turn for U.S. foreign policy. How did Ukraine react to all this? Because it definitely seems like it's the U.S. throwing out its big point of leverage on Russia, which is to have the world starve its war machine of oil revenue. Ukrainian President Vladimir Zelensky slammed the decision, ladling the deal as an investment in a war that must. Yeah. One of the first reactions was President Zelensky saying this was a weak decision. Well, I look at it differently. Zelensky could have settled this war many times, many, many times. And you actually then had this new back and forth spat between Zelensky and Trump play out over the weekend. I think yes, they get a new leader who can make a deal because he could have made many deals. And for some reason he doesn't. And there was shock across Europe also because really up until now the U.S. had really stayed tough in terms of sanctions policy toward Russia and had also continued supporting Ukraine in many ways. Right. Officials in Europe and elsewhere had long feared that Trump might take a softer approach to Russia, might pursue a closer relationship. But that hadn't happened yet. Yeah. I mean, it's important to step back and sort of see that despite all the worries of what Trump might do vis-a-vis Ukraine and Russia, the Trump administration really kept a lot of the Biden-era policies in place, whether it's in terms of providing intelligence support to Ukraine's war effort and keeping the sanctions in place. In fact, expanding the sanctions a year ago, the administration put in place really tough new sanctions against Russia's oil industry. And just a few weeks ago, Trump signed a bipartisan bill out of Congress that allowed for new sweeping sanctions against Russia and especially Russian energy. So this move on Russian diesel, even though the numbers are relatively small, is still the most concrete sign that this administration in Washington is ready to really substantively change its relationship with Russia and to do so potentially at Ukraine's expense. We'll be right back. All right, Anton, obviously a lot of countries are quite shaken by this news. What is the Trump administration's defense of this U-turn in American policy? Well, a few things. I mean, on buying diesel, I think what you'll hear is this is America first. This is taking care of American consumers, American farmers at a time when they're struggling. They will also say that Europe has continued to buy Russian energy. And to some extent, that's true. Europe is still buying Russian-liquified natural gas, landlocked countries in particular, Slovakia and Hungary are still buying Russian oil. Now, the EU has drastically reduced its reliance on Russian energy and is actually planning to completely end Russian gas imports by next year. So here we're definitely moving in opposite directions. I think folks in the administration they'd also say that Trump is still set on somehow ending the war in Ukraine. Of course, we should also say this is something that is deeply uncomfortable, not just for American allies in Europe, not just for even Democrats, but also many Republicans. All right. So if the America first argument for this policy is that buying Russian diesel will lower prices at the pump for Americans, is that true? Like, brass tax. How much will this actually lower gas prices in the United States? So, minimally. I mean, the initial number we're talking about is an extra 300,000 tons of Russian diesel onto the global market. That's less than one day of consumption in the US. Less than one day? Yes. And I did check the AAA gas prices numbers. So as of Tuesday, diesel is $6.28 a gallon compared to $6.32 a gallon a week ago. So the price has gone down, but not by much. And the amount that would be coming in really wouldn't make a dent in the overall demand that there is, right? Yeah. But at least it's an effort. Yeah. I think this has a lot of symbolism, both at home and abroad. At home, it's a thing that can be messaged to voters of this administration is taking drastic steps to try to bring the price of diesel under control. It is a message to Russia of this administration is willing to do stuff that is going to be criticized in many quarters for being too friendly to Russia. And frankly, it's yet another message both to Ukraine and to Europe that President Trump and his top officials are really willing to pursue their own path on matters of global security. But just thinking about Europe's and Ukraine's concern here, can I just ask how much will this policy actually help Russia in funding its war in Ukraine? Because if this is just symbolic and not all that meaningful for US consumers, I'm wondering how much of an impact it'll have in Russia? Well, at the end of the day, oil and gas exports are at the core of what drives the Russian economy. So any chink in the West's sanctions wall against Russian energy is important for Putin. So I think what you'll see is Putin very much pocketing the wind here and not as of yet changing the way he's approaching the war. After Trump made this announcement on Friday, the Kremlin has continued to say that they're not ready to negotiate with Ukraine, and they have continued to hit Ukrainian infrastructure, causing civilians to die. They have not changed their approach to this war. Do you get the impression that that pisses Trump off? Like, wasn't part of the premise of all of this deal-making, deal-dangling to eventually end the war? And yet here you have Russia taking the symbolic win and keeping up the strikes? No, I don't have any indication that Trump has gotten more upset at Putin over this. What all our reporting points to is that Trump right now is fixated on Zelensky and is angry at Zelensky, clearly in part because of the high diesel prices, high gas prices here in the US and the approaching midterms. And that of course has been a theme throughout for most of the last two years. Trump really giving Putin the benefit of the doubt, even as this war escalates and putting the onus on compromise and settlement on Zelensky. And the question, of course, is does this affect other kinds of ongoing US support for Ukraine? President Trump said on Tuesday that US intelligence support for Ukraine is continuing. The Ukrainians need that for both targeting and seeing what Russia is firing at them. But the Ukrainians are definitely worried that this is something that Trump could put into play. Anton, am I right that we should see what's happening now as a shift in the Trump administration strategy in terms of pressuring Russia? At the outset, you said they were holding out the promise of these business deals as an incentive to get Russia to end the war. And now instead of a reward, it sounds like they're using these deals as something like a down payment. Like they're banking on the idea that giving Russia a taste of what a close relationship feels like can get Putin to agree to stop fighting. Yeah, I mean, absolutely. I think one of the shocking things to people about this diesel agreement has been that as far as we know, there is no concession that the Russians made in return for the sanctions being lifted. So yeah, and our reporting does indicate that there are other deals that the US and Russia are talking about that they might even do without the war coming to an end first. Like what? Give me an example of that. Well, look, we know a lot of different deals have been discussed. I mean, the future that is being imagined here is one where There are no more sanctions and tons of deals, tons of money flowing between the US and Russia. But there is one specific deal that we've been reporting on over the last few weeks that is quite far along, and that's the purchase of the international assets of a big Russian oil company called Bluecoil. Basically, what that would be would be for a group of investors to come in and buy those billions of dollars in assets of this energy company, be it refineries, oil fields, even gas stations in New Jersey, in what would be a really lucrative transaction, because Bluecoil is under US sanctions and as soon as Bluecoil agrees to sell those assets and the US approves the sale, the value of those assets would go way up. And then even more significant is, if you look at who these investors are that are now close to signing this deal. Who are they? So, it's an investor group led by Todd Bowley, the American billionaire who has made donations to Trump's political causes, and of course, the US government would take a stake. But so would several investors from the Middle East who have business ties to Woodcoff and Kushner. For example, to Syrian-Catari billionaire brothers who are also business partners with Jared Kushner and his wife Ivanka Trump, the president's daughter, Anna Resort in Albania. You're saying this particular deal, it benefits the US government, but also the people who are negotiating the deal itself, people close to the Trump family. Well, it benefits the US government, there's an argument to be made that it also benefits American foreign policy, because it would give the US a stake in these really strategically significant assets, like again, these very large refineries in Europe. What we've been hearing from the administration is, Woodcoff and Kushner have been doing this only in the service of American interests, and there is no indication that Woodcoff or Kushner would profit directly, but of course, there are many potential investors out there, and it is significant that the investors getting a piece of this potentially very lucrative deal are ones with business ties to the two main American negotiators. Anton, just stepping back, is there any indication that this strategy of pursuing these deals has begun to encourage Russia or Putin himself to come to the table to try to actually end this war? Like, do we know if this may be working at all? I mean, as you know, before coming to Washington, I covered Russia and I covered Putin, and I know that many American administrations have really struggled with how best to engage Putin. Obviously, the prior administration was not able to head off Putin's invasion of Ukraine or to end it, and the strategy was really to take a very hard line against Russia and try to diplomatically isolate Russia. This administration has been bringing Russia back into the fold, right? We have Trump speaking regularly to Putin on the phone. We have Woodcoff and Kushner traveling regularly to Russia to meet with Putin. We saw the Russian finance minister come to the G20 recently in North Carolina. We might have Putin coming to the big G20 summit in Miami in December. They are really engaging him. We know, in a way, that is something that Russia really wants. Putin really wants to be seen as an equal to the US. He wants to be talking to the American president. But we have got to acknowledge that this new approach of engagement, it has been since Trump returned to office early last year and it still hasn't worked. The war has only escalated. By many accounts, it has actually only gotten more dangerous as Putin's bombardments and Russia's hybrid war with Europe intensifies. The big question to me going forward is what about all the other stuff that Putin wants and is going to need to be negotiated? As discussed, Putin cares about the geopolitics of Russia's relationship with NATO, the problems of territory and how to keep Ukraine sovereign and make sure Russia is not able to invade again. And so it's those really complicated questions where clearly there's still a lot of work to be done. I guess my question is, if this ultimately doesn't work, if Putin continues to escalate, do you think Trump eventually decides to pull back on the strategy of getting closer to Russia? Well, honestly, the indication for now is more the opposite, that Trump could end up pulling back from Ukraine and engaging with Russia, despite the war continuing. You know, that is something that Putin has been trying to achieve ever since Trump returned to office. Putin has been trying to say to Trump, look at all these business deals we could do if we just forget about the war in Ukraine. Like don't condition your engagement on the war, let's treat these two things as separate. That has been a policy goal of the Kremlin for the last year and a half and more. So I mean, what is the impact of that in the long term in terms of our policy in Russia? Are we looking at a world in some point in the future in which economic pressure on Russia, one of our biggest adversaries is no longer a point of leverage, either as a characteristic? No, I mean, there are still a ton of sanctions on Russia and my sense is the administration does still see those sanctions as leverage, but potentially in a more incremental way than immediately getting Russia to end the war. I think after the midterms and certainly after the next presidential election, you can very much imagine US policy shifting again into a more traditional mode. It'll be really important to see what happens in Europe, because in Europe right now you have a far right and far left movement, Germany, France, UK, promoting a more friendly relationship to Russia. For example, especially in Germany, there's a lot of talk on the far right about why aren't we importing Russian gas again. And so that's going to be a really key thing to watch. Does Europe still keep its hard line or do upcoming elections there change how France and Germany and others are dealing with Russia? And finally, you know, I've heard a lot of speculation from analysts following the war that at the end of the day, it's going to be some kind of negotiation directly between Russia and Ukraine that ends this war. Because we've clearly seen that there are limits to US leverage both on Russia and on Ukraine. So that kind of brings us back, I think, to the main victims here. The awful thing about all this is that all these business negotiations and this brinksmanship on sanctions and deals and what's going to happen to the diesel supply, that is all playing out as this war gets worse and worse on the ground in Ukraine. Because the winter approaches, at a time when Ukraine is extremely low on missile defenses, Russia is going to be able to make this winter truly awful and there, for the moment, we still see no end in sight. Well, Anton, thanks for coming on the show. Thanks for having me. We'll be right back. Here's what else you need to know today. Kimberly Gilfoyle resigned as the US ambassador to Greece on Tuesday after the White House asked her to step down. Gilfoyle had been the subject of a string of damaging reports that first appeared in the Wall Street Journal about her potential conflicts of interest. For example, a Republican donor said that Gilfoyle had asked him to wire her $100,000 to pay off her credit card just before her Senate confirmation hearing last year, promising to serve as the donor's, quote, "ride or die in the Trump world," if he sent the money. In a social media post, Gilfoyle said she planned to, quote, "vigorously defend her name, reputation, and integrity." And Pope Leo XIV was diagnosed with lung cancer on Tuesday, and a lower lobe of his right lung was removed during surgery. The Vatican said in a statement that the operation was successful, and there were no complications, but didn't specify whether the Pope would undergo further treatment. Finally, Cornell University announced that it was banning parties at fraternity houses for the rest of the academic year in response to a student's allegation of gang rape in October 2024. The university also said that it would add "experience sexual assault investigators to work with its police force. Cornell's president told the Times that the ban would allow for a thorough review of "Frat Life on campus" to determine whether it could safely resume. Today's episode was produced by Claire Tennis-Getter, Adrian Hurst, and Eric Kruppki. It was edited by Paige Cowan and Lizzo Bayland. Contains music by Marion Luzano and Elisabeth Etoupe, and was engineered by Alyssa Moxley. Our theme music is by Wonderly. That's it for the daily. I'm Natalie Kichroa. See you tomorrow.