The odyssey of the ship carrying Putin’s diesel, bound for Brazil

The high waves in the north-east Atlantic provide a good vantage point from which to gauge the impact of the US mid-term elections on the already largely unenforceable Trump-Putin agreement on Russian diesel.

An oil tanker with a red and black hull has been drifting at sea for days: the Leruo, sixteen years old and flying the Sierra Leone flag. Two nights ago, it was travelling at a speed of eleven knots in the middle of the Atlantic, suddenly heading south-west. It set sail with a cargo of fuel from Primorsk, the second-largest Russian port on the Baltic after St Petersburg, bound for Manaus, Brazil. On 29 October, it changed course without specifying its port of discharge: “We are heading towards the Atlantic coast on orders”.

The Leruo is one of three Russian oil tankers that were due to transport a total of 140,000 tonnes of diesel to the United States, according to the 9 October agreement between Donald Trump and Vladimir Putin to grant an exemption from international sanctions on the shipment of 300,000 tonnes of Russian diesel to the United States. To implement that agreement, the OFAC office of the US Treasury Department issued General Licence 135.

On 10 October, the Kremlin authorised new fuel shipments following Putin’s agreement with Trump to resume supplies to US and global markets, with a corresponding suspension of US sanctions on Russian fuel supplies, despite the fact that European embargoes on the same imports remained in force. The Leruo was sailing in the North Sea and changed course, heading directly for the west coast of the United States. The same order to change destination was issued to the Talisman, a Russian-flagged oil tanker initially bound for Turkey and then diverted to the port of New York.

However, it is by no means certain that Trump’s decision to lift sanctions will make Russian diesel – the import of which has been banned by the US Congress – marketable in the United States. The American importer, the port and the legal representative of any company taking delivery of that shipment run the risk of being accused of breaching US law. And given the current climate following the midterm election results and the composition of the new US Congress, only intrepid adventurers would dare to take on that precious diesel.

In fact, someone has ordered the captain of the Leruo to change course once more: not north-west, but south-west – heading for Brazil. To the port of Santos, or to Manaus. Talisman has also received another counter-order: no New York – we are heading for Istanbul.

In Brazil, that Russian diesel is eagerly awaited, amongst others, by the five major companies that have absorbed the surge in Russian fuel imports in recent years: the Manguinhos refinery, Oil Trading Import, Blueway Trading Import, Nimofast and Vibra Energia. Brazil’s doors were thrown wide open to Russian hydrocarbons during the Bolsonaro administration, and the subsequent Lula administration has increased supplies. In 2021, 0.2 per cent of Brazil’s diesel imports came from Russia. Last year, this figure rose to 58.9 per cent of the diesel imported into Brazil.

Brazil has never joined the sanctions imposed by the United States and the European Union against Russian fuels and, following Russia’s invasion of Ukraine, diesel has become the main Russian product imported by Brazil, overtaking fertilisers – which had previously been the largest import from Russia – in terms of value. A side effect of the sanctions on Russian fuel was a sharp rise in the price of oil on the international market, particularly for fuels produced in the United States. Until then, according to data from Brazil’s Ministry of Economy, 49 per cent of imported diesel came from the United States. Under pressure from rising prices, Bolsonaro first abolished federal taxes on petrol and then forced individual states to lower their own taxes as well. Despite this, prices continued to rise. On the night of 27 June 2022, four months before the elections he hoped to win to secure a second term, Bolsonaro addressed a group of supporters outside the presidential residence, the Palácio da Alvorada, announcing the following news: “I have spoken to Russian President Putin; there is a possibility of buying diesel from there. It is certainly a more affordable price.”

The two had already met a week before the start of the Russian invasion of Ukraine, and Bolsonaro described the relationship between Brazil and Russia as “a perfect match”.

The chief executive of the Brazilian Association of Fuel Importers, Sérgio Araújo, explains that Brazilian companies have been encouraged by the Bolsonaro government to source Russian fuel. Whether or not the purchase of Russian diesel might finance the war in Ukraine, he believes, the importers he represents must ask themselves this question, whilst also considering “whether it is right that the poorest are the first to feel the effects of our failure to restock”. According to Araújo, however, business leaders in the sector began to see Russian diesel as a major business opportunity during the rise in fuel prices. Smaller companies were the first to import Russian diesel, and the industry giants soon followed suit. When, in October 2022, then-President Bolsonaro—seeking re-election—found himself overtaken by Lula (who was subsequently elected) in the first round, he rushed to social media to make a grand announcement on Twitter: “35 million litres of diesel imported from Russia have arrived at the port of Santos. Further shipments are underway. New consignments are expected in October, increasing competition and driving down fuel prices.” Bolsonaro went on to lose the election, but Brazil had opened its doors to Russian fuel. And Lula was careful not to close them. According to data from the Ministry of Economy, between 2021 and 2022, imports of Russian diesel rose from $16.9 million to $95 million, an increase of 462 per cent. In the years that followed, during the early years of Lula’s third term in office (2022–2026), they continued to rise thanks to the entry of major oil companies into the sector.

Lula, like Bolsonaro, has avoided directly condemning President Putin for the invasion of Ukraine.