The Energy Truce Was Written for the Pump

The other front of this war produced a truce in June that could actually be checked. A day after the U.S. and Iran stopped shooting, the Strait of Hormuz, the mouth of the Gulf, filled with tankers: about 20 million barrels of crude got moving in the first 24 hours, with another 90 to 100 million queued behind it, and the price of oil came down ^[1]. The ceasefire frayed soon enough; Iran hit a commercial vessel in the strait not long after. But by then the count was done. In this war, a real truce leaves a physical signature, and you can count it in barrels. September's version arrived on Monday the 14th, in the past tense ^[2].

Ukraine has agreed not to hit Russian Energy targets. Russia has agreed to do, likewise! — Donald Trump

By day's end, neither government named in the announcement was standing behind it. Zelenskyy said no agreement existed, and that Ukraine would stop hitting energy targets only if Washington could guarantee that Moscow was genuinely ready to end the war ^[2]. The Kremlin's answer was warmer, and came pre-priced.

If the Russians are ready for an energy truce, that means there will be no attacks on energy facilities at all. — Volodymyr Zelenskyy

So ended day one: an agreement announced by one government and unclaimed by the other two. The energy strikes the announcement forbade kept coming, and so did all the others. On the 13th, a day before it was posted, Ukraine hit the Slavyansk and Taneco refineries while Russia took out power substations in Odesa and Mykolaiv and rail lines in the west ^[3]. On the 16th and 17th, Russia barraged Kyiv, Odesa and Zaporizhzhia, hitting a water utility, residential buildings, a petrol station and a university; Ukraine answered with the Yaroslavl refinery, one of Russia's five largest, and a Rostov airfield ^[4][5]. By Thursday, Ukrainian drones were striking Russian airfields while Russian missiles went at ports and data centers ^[6]. None of it was hidden. Zelenskyy thanked his warriors in public.

I thank our warriors who make the war felt by Russia every day. — Volodymyr Zelenskyy

That is not a government breaking a deal it made. It is a government advertising the campaign the deal was supposed to stop. The concept did exist, though, two days before the announcement, as Kyiv's own fallback for peace being out of reach.

At the very least, again, if peace is impossible from today... we can at least resolve the issue of an energy truce, a food truce, food security; such decisions can be made. — Volodymyr Zelenskyy

The offer carried a reciprocity clause: if Russia caused blackouts, Ukraine would answer in kind ^[7]. So the thing declared an accomplished agreement on the 14th was a conditional offer on the 12th, and its condition was being broken by both sides at the moment of its declaration. The announcement did not mention any of this. Anyone who has followed this war knows its diplomatic windows double as strike windows. What is new is where the truce did exist: not on a battlefield. In the price of fuel. The announcement's subject was never really the front line. It was the pump. Trump framed the truce in diesel terms, with American diesel above $6 a gallon, and made the ask of Kyiv directly ^[2].

We spoke to Mr. Zelenskyy about it. There are plenty of other targets. Don't hit diesel fuel, because that's hurting, that's hurting the world. — Donald Trump

The ask, in full: not peace. Diesel. And he has blamed the diesel price on Ukrainian strikes in public ^[8]. Announcements like this one move the market on their own, and the move is measurable. When the Kremlin announced a Trump–Putin summit last year, Brent, the world's oil benchmark, fell 4.4% in a day; the American gauge, WTI, fell 5.1%. The summit had not happened. The deal did not exist ^[9]. The White House had said as much in June: once the Iran situation is resolved, oil and gas prices, and inflation with them, will come down fast ^[10]. The squeeze those announcements are aimed at has two authors, and the announcement names one. Russia's damaged refineries and the war-shut Gulf between them supplied about a third of the world's diesel ^[11].

≈40% European diesel benchmark, rise since June 18 — Brent crude rose about 5% over the same stretch ^[11]

When diesel runs that far ahead of crude, the shortage is not oil. It is refining, and the refining was knocked out on two fronts: some of it by Ukrainian drones, some of it by the Iran war. The announcement assigns the whole of it to the drones. The same week, the Federal Reserve raised interest rates for the first time in three years and pointed at energy prices ^[12]. One line more, which no version of the announcement will include. The Iran war has been good to Russian oil: closing Hormuz lifted the price of Russia's crude exports ^[13]. The administration's other front has been raising the revenue of the adversary this truce asks Kyiv to stop attacking. June's truce proved itself in tankers within 24 hours. September's produced no signature at all: no pause to find, no barrels to count, refineries and substations still taking hits through the week. Its measurable effects are all on prices. And the price that explains the truce best was set months before it existed, by the other war: the closure of the Strait of Hormuz lifted Russian export crude from under $40 a barrel in December to about $62 by spring ^[13]. That is the premium the Iran war pays the country whose refineries Kyiv has been asked to stop hitting. The list of targets Kyiv has just been asked to spare and the source of Moscow's new oil money are the same economy.