Key facts
- The US administration is considering restrictions on diesel exports due to record-high prices.
- President Donald Trump endorsed the idea of not sending diesel out of the country.
- The US is the world's largest diesel exporter, averaging about 1.5 million barrels per day so far this year.
- About 60-70% of US diesel exports go to Latin America, with Mexico being the largest destination.
- A diesel export ban could force US refiners to cut crude processing by approximately 12%, affecting gasoline and jet fuel supplies.
- Global diesel shortages are expected to persist into 2027.
The US administration is considering restricting diesel exports as domestic prices reach record highs, a move that could offer relief to farmers, truckers, and consumers. President Donald Trump has voiced support for keeping diesel within the country.
The United States is the world's largest diesel exporter, with shipments averaging about 1.5 million barrels per day this year. A ban could initially lower prices domestically, particularly along the Gulf Coast where much of the fuel is produced. However, analysts warn that restricting exports does not create more diesel; it merely redirects existing supply. This could lead to higher prices overseas, which may eventually find their way back to American consumers through increased costs for imported goods, especially agricultural products.
Mexico, the largest foreign buyer of US diesel, is also a significant supplier of agricultural products to the US. If Mexico faces higher diesel costs due to a US export ban, it could increase transportation and operational expenses for Mexican farmers and distributors, potentially leading to higher prices for US consumers on imported fruits, vegetables, and other goods. Persistent high energy costs could also influence planting decisions, potentially leading to lower yields and tighter global food supplies in the future.
Furthermore, US refineries, particularly those on the Gulf Coast, are structured to export a significant portion of their diesel production. A complete ban could force refiners to cut crude processing by as much as 12%, impacting the production of gasoline and jet fuel as well. This creates a conflict between farmers seeking lower input costs and refiners who rely on export markets to maintain high utilization rates and profitability.
The global context is a significant diesel shortage, exacerbated by the war in Ukraine and disruptions in the Middle East. US diesel inventories are at historically low seasonal levels, and industry analysts anticipate the shortage will continue into 2027. While restricting exports could redirect some supply domestically, it cannot resolve the underlying global supply constraints.