Trump ‘very seriously' considering diesel export ban as global supply crunch worsens

• Average U.S. diesel prices reached approximately $6.50 per gallon, near the record high of $6.53 set on September 22, driven by conflicts disrupting oil trade routes and Ukrainian attacks on Russian refineries.
• The American Petroleum Institute and oil industry groups strongly oppose an export ban, arguing it would compound supply problems and hurt consumers rather than provide relief.
• Morgan Stanley strategists warn a U.S. export restriction would initially lower domestic diesel prices but could trigger higher global prices and create a feedback loop raising U.S. gasoline prices as refineries adjust operations.

Summary: Trump Considers Diesel Export Ban Amid Global Supply Crisis

President Trump confirmed the White House is "very seriously" considering a diesel export ban to address soaring U.S. fuel prices ahead of November midterm elections. Average U.S. diesel prices reached approximately $6.50 per gallon on Friday, just below the September 22 record high of $6.53, representing a sharp increase year-over-year.

Key Developments:

• Administration reportedly preparing a potential 90-day diesel export ban
• Energy Secretary Chris Wright suggested restrictions rather than an outright ban
• Trump acknowledged the ban could paradoxically increase gasoline prices as refiners adjust operations

Market Implications:

The U.S. has become a critical marginal diesel supplier globally, providing roughly half of Europe's diesel imports recently. Analysts warn an export ban could backfire severely:

• Morgan Stanley strategists predict initially lower U.S. prices but "adverse reactions downstream"
• Global diesel prices would surge, with a potential feedback loop increasing U.S. gasoline costs
• European diesel prices could reach "unprecedented levels," according to Argus Media's Benedict George

Supply Crisis Drivers:

The global diesel crunch stems from multiple disruptions:

• Russia-Ukraine conflict affecting refinery operations and trade routes
• Middle East supply disruptions, including semi-closure of Strait of Hormuz
• Ukrainian attacks on Russian refineries

Industry Opposition:

The American Petroleum Institute (API) and energy companies strongly oppose the ban, arguing it would "exacerbate refining challenges and ultimately hurt consumers." API CEO Mike Sommers advocates for "more supply and flexibility—not new restrictions."

Market uncertainty remains extreme, with some traders abandoning forecasting efforts given unpredictable geopolitical developments and unclear U.S. policy direction.