Latin America most exposed to any US ban on diesel exports, Goldman Sachs says

• Ecuador, Chile, Mexico, and Peru each import more than 50% of their diesel consumption from the United States, making them highly vulnerable to export restrictions
• A U.S. diesel export ban would reduce American retail diesel prices by $0.25 per gallon per week of bans, creating only a 2-3 basis point drag on U.S. headline inflation after one month
• Each sustained 10% increase in diesel prices would raise global headline inflation by 0.1 percentage point, with larger effects in Emerging Market Asia and Europe

Summary:

Goldman Sachs warned that Latin America would face the most significant exposure if the U.S. implements a diesel export ban, a measure President Donald Trump indicated he discusses "every day" to combat soaring energy prices.

Key Impact on Latin America:

• Ecuador, Chile, Mexico, and Peru are particularly vulnerable, with U.S. imports accounting for over 50% of their diesel consumption
• A sudden supply cutoff could reduce regional GDP by approximately 1%, though inventory buffers and alternative global suppliers would partially mitigate the impact

Market Implications:

Goldman Sachs projects that global supply would adjust quickly given diesel's globally traded nature, with the primary impact being elevated diesel prices rather than supply shortages. The bank estimates:

• Each sustained 10% increase in diesel prices would boost global headline inflation by 0.1 percentage point and core inflation by 0.03 percentage point
• Emerging Market Asia and Europe would experience larger inflationary effects
• U.S. retail diesel prices could decline by $0.25 per gallon weekly during export bans, creating a modest 2-3 basis point drag on U.S. headline inflation after one month

Policy Context:

The Trump administration has reportedly pressured oil companies to draw down emergency diesel inventories to ease global fuel prices or face potential export restrictions. This development follows ongoing White House efforts to address energy price pressures affecting both domestic and international markets.

The analysis underscores the interconnected nature of global diesel markets and the potential for significant regional disparities in the event of U.S. export restrictions.