Key facts
- A U.S. diesel export ban would most impact Latin America, according to Goldman Sachs.
- Mexico, Ecuador, Chile, and Peru rely on U.S. diesel imports for up to 50% of their consumption.
- Goldman Sachs estimates a ban could reduce Latin America's GDP growth by 1%.
- Russia has extended its diesel export ban.
- China suspended all fuel exports for the current month.
- U.S. retail diesel prices have reached $6 and $6.50 per gallon.
A potential ban on U.S. diesel exports would have the most significant impact on Latin America, according to a note from Goldman Sachs. The investment bank highlighted that countries such as Mexico, Ecuador, Chile, and Peru depend on U.S. diesel imports for as much as 50% of their fuel consumption, making them highly vulnerable to a suspension of shipments.
Goldman Sachs suggested that while global diesel markets would likely adjust supply quickly, the primary economic consequence would be higher prices. The bank estimated that such a ban could reduce Latin America's collective GDP growth by 1%. However, it also noted that the impact on supply, if not prices, could be softened by a shift to other exporters, though the report did not specify who these would be.
Global diesel supply concerns are already heightened due to actions by other major players. Russia has extended its ban on diesel exports, with President Putin stating that Russian diesel will not return to international markets until sanctions are lifted. China has also deepened these concerns by suspending all fuel exports for the current month.
While a U.S. ban on diesel exports is not finalized, President Trump has indicated he is discussing the topic daily. He mentioned that the ban "just seems that it would have a negative impact on gasoline." Despite this, Trump has not ruled out the idea, which emerged as U.S. retail diesel prices hit $6 per gallon and subsequently $6.50 a gallon nationwide average. Trump has also threatened France and Germany with an export ban unless they release diesel from their strategic reserves, which account for 35% of the European Union's total.