Trump's Russian Diesel Deal and the Loophole Australia Hasn't Closed
Diesel is sitting above 280 cents a litre across most of Australia this week, and some of the fuel behind that number may well have started life as Russian crude. Australia banned Russian oil more than four years ago. Washington's new diesel deal with Moscow has put a spotlight on a gap in our rules most motorists have never heard of.
A phone call, then a hard no
Late last week US President Donald Trump said he had reached an agreement with Vladimir Putin for Russia to supply diesel "to the American and global marketplace". According to the ABC, the volumes start at roughly 270,000 tonnes immediately, rise to about 450,000 tonnes the following month and then to around 900,000 tonnes, with talk of 2.7 million tonnes "within a short period of time". The US Treasury issued a temporary six month licence allowing Russian diesel into the United States, SBS reported.
On 10 October the Russian government partially lifted the diesel export ban it imposed in July after Ukrainian drone strikes on its refineries, clearing 500,000 tonnes for foreign buyers "at this stage", according to Russian state media.
Canberra answered the same day. At a press conference in Fairfield West in Sydney's west, Energy Minister Chris Bowen said: "We don't need or want Russian fuel in Australia." Russia, he said, "should not be rewarded for their illegal and immoral invasion of Ukraine." And on Australia's stance: "That policy is not changing, will not change."
Big headline, small barrels
So how much fuel are we really talking about? Reuters energy columnist Ron Bousso told the ABC the total equals about 12 hours of global supply. He called the volumes "insignificant" and said they probably wouldn't "move the dial".
The International Energy Agency's monthly oil market report, released on 14 October, points the same way. Global diesel exports in September were about 700,000 barrels a day lower than a year earlier, the IEA said, with losses from Russia and the Middle East "only partly offset" by other suppliers. Diesel benchmarks have eased from records above US$200 a barrel in September, but still sit at "nearly double the price of crude oil", well above where they were before the crisis. The agency expects diesel to stay tight "well into 2027".
The fascinating backstory
Australia announced its ban on Russian oil, refined petroleum products, gas and coal on 11 March 2022, and it took effect on 25 April that year.
The catch sits in a Department of Foreign Affairs and Trade guidance note. When a refinery in a third country turns Russian crude into diesel or petrol, DFAT's sanctions office considers the refined product to "originate" in that third country. Legally speaking, it stops being Russian fuel the moment it's refined.
India is where this matters. The Jamnagar refinery, owned by Reliance Industries and described by Bowen as the largest in the world, became one of the biggest buyers of Russian crude after 2022. Almost half its crude in the first half of 2025 came from Russia, according to CREA, and it's a regular supplier of diesel to Australia.
The Centre for Research on Energy and Clean Air (CREA), a Helsinki research group that tracks Russian energy exports, estimates Australia imported US$6.4 billion of oil products from three Indian refineries using Russian crude between February 2023 and June 2025. About US$2.5 billion of that was attributable to Russian crude, by CREA's reckoning. Diesel was the biggest item, and those refineries supplied about 12 per cent of Australia's diesel imports in 2024. CREA describes Australia as the largest single buyer of these products anywhere.
To put that in perspective, CREA notes the estimate is more than double the US$1.09 billion in military and humanitarian aid Australia gave Ukraine up to April 2025.
In July 2025 the tanker Seferis docked at Kwinana, 40 kilometres south of Perth, carrying fuel that campaigners said came from Jamnagar.
How Europe handled it
In July 2025 the EU's 18th sanctions package moved to ban imports of oil products refined from Russian crude in third countries, and it sanctioned India's Vadinar refinery, which is part owned by Russia's Rosneft.
Australia hasn't followed. Responding to an earlier parliamentary inquiry into support for Ukraine, the government said it "cannot independently track liquid fuel movements nor confirm the origin of these products once they have been substantially transformed in a third country". A Senate committee examining Russia sanctions has recommended banning petroleum products made from Russian oil no matter where they're refined, according to reporting on its findings.
Why India matters more than ever
Late last month Bowen toured Jamnagar and met Reliance's chief executive, with fuel security "a focus of that visit". Asked about diesel from India on 10 October, he said "India is a key friend and trading partner of Australia" and that he was "not making any particular announcements about that relationship at the moment."
India's appetite for Russian crude has swung around this year as Gulf supply was cut. Ship tracking firm Kpler estimates Russia's share of India's crude imports reached as much as 56 per cent in July before falling to around 35 per cent in September.
Australia needs every reliable refinery it can get. Domestic refining at Lytton and Geelong covers only around a fifth of national supply. Bowen said 51 ships carrying fuel were on their way here, and government figures show about 3.2 billion litres due over the next four weeks.
What it means at the bowser
The practical upshot for your wallet from the Trump deal? Close to nothing. Australian wholesale prices follow Singapore benchmarks, so Russian diesel heading to America only helps us indirectly, by easing competition for the Asian cargoes we rely on.
Petrolmate's figures from the state government schemes back that up. Across roughly 4,000 servos reporting diesel (the Northern Territory aside), the average was 286.3 cents a litre on 1 October, 283.7 on 11 October and 282.4 this week. Diesel was already drifting lower before the deal and has kept going at much the same pace. Unleaded went the other way, rising from 239.9 to 245.7 cents over the same fortnight.
The diesel premium depends on where you live. Over the past 48 hours diesel sat about 45 cents above unleaded in South Australia, 38 cents in NSW and just 30 cents in Western Australia. The ACCC's latest weekly update put average diesel across the five largest cities at 281 cents on 7 October, 104 cents higher than before the conflict began in late February.
Closing the loophole would raise its own price question. CREA argues a full ban wouldn't cause significant inflation here. John Coyne of the Australian Strategic Policy Institute has pointed to the trade offs, including fuel prices and diplomatic ties with India. With diesel stocks at 31 days of cover, Canberra keeps landing on the cautious side of that argument.
The bigger picture
The real story is two policies pulling in different directions. Our sanctions say no Russian oil. Our fuel security plan says buy diesel wherever reliable tankers come from, and India has refining muscle few can match. With the IEA not expecting global stocks to rebuild until the second half of 2027, that tension won't ease soon.
What to keep in mind
- Don't expect relief from Washington's deal. The volumes are small and aimed at the US. The price trends and the ACCC's weekly updates are better guides.
- Diesel is easing, slowly. It's down about 4 cents since 1 October. Compare diesel prices near you before a long run, because the spread between nearby servos is often bigger than any weekly move.
- Unleaded is moving the other way. Up nearly 6 cents in a fortnight, so timing counts. Check the best time to fill up in your city before buying unleaded.
- You can't shop by origin. Nothing at the bowser tells you where the crude in your tank came from, and imported fuel is typically mixed in terminals before it reaches your local servo.
- Watch Canberra. If the government follows Europe, it would change where importers buy, not prices overnight.
The fuel industry rarely makes headlines until prices spike, and this year it has barely left the front page. Where our diesel comes from is now as much a foreign policy question as a pricing one. Keep an eye on this space.