Goldman expects initial diesel price decline under US export curbs

• Each week of a diesel export ban would reduce US retail diesel prices by approximately 25 cents per gallon (4% from current $6.50/gallon level) while storage capacity remains available
• Once diesel storage is full, the ban would create upward pressure on gasoline prices of $0.3 per gallon per week, as diesel, gasoline, and jet fuel are produced together
• European wholesale diesel prices would increase by $3 per barrel (under 2%) per week of the US ban, though strategic petroleum reserve releases could offset about half the increase

Summary: Goldman Sachs Analysis on Potential US Diesel Export Ban

Key Development: Goldman Sachs issued a note Saturday analyzing the potential impact of a US diesel export ban, following President Trump's Tuesday endorsement of restricting exports from the world's largest diesel exporter.

Price Impact Projections:

• Initial Effect: Each week of a diesel export ban would reduce US retail diesel prices by approximately $0.25/gallon (~4%) from current levels of $6.50/gallon, assuming available storage capacity
• Secondary Effect: Once storage fills, each week would add $0.30/gallon upward pressure on US gasoline prices due to joint production of diesel, gasoline, and jet fuel
• European Impact: European wholesale diesel prices would rise $3/barrel (~2% weekly), though Strategic Petroleum Reserve releases could offset roughly half the increase

Policy Context: The analysis comes amid conflicting signals from the Trump administration. While the President supports export restrictions, US Energy Secretary warned Wednesday that a ban could backfire by raising gasoline and jet fuel prices domestically.

Goldman's Assessment: The bank views export restrictions, including quotas, as a "plausible outcome" and warns of increasing market disruption over time. The longer-term effects would prove more disruptive due to the integrated nature of refinery outputs.

Market Implications: Once lifted, a diesel ban would cause US diesel prices to reconnect with international markets, creating upward domestic pressure and downward pressure abroad. This suggests temporary price dislocations rather than sustainable market changes.

The analysis highlights the complex tradeoffs between lowering diesel costs for domestic consumers versus potential inflationary pressure on other fuel products and international market disruptions.