Key facts
- US diesel prices hit a record $6.528 a gallon this week.
- President Donald Trump said he backed a ban on diesel exports.
- US Energy Secretary Chris Wright denied reports of a 90-day diesel export ban but contacted refiners about voluntary restraint.
- West Texas Intermediate crude futures traded as much as $12.02 a barrel under Brent futures on Thursday, the largest discount since May 6.
- Analysts estimate US refiners could cut crude runs by up to 12% if diesel exports are banned.
- Global diesel supplies are constrained by Middle East conflicts, Russian export bans, and refinery shortages.
US diesel prices have surged to a record $6.528 a gallon, prompting discussions about a potential ban on exports to alleviate domestic shortages and high costs. The prospect of such a ban is widening the discount between US crude oil futures and the global Brent benchmark, signaling that markets anticipate US refiners may process less crude if their diesel output is stranded at home.
While a ban could offer immediate relief to consumers, analysts warn of potential negative consequences. If diesel exports are halted, US refiners might cut their crude runs by as much as 12%, potentially leading to storage hubs filling up within a month. Wood Mackenzie estimated this could force refiners to cut crude runs by over 2 million barrels per day. Furthermore, a ban could lead to higher gasoline prices as diesel and gasoline are derived from the same crude oil barrel.
The US is the world's largest diesel exporter, with net exports of about 1.2 million barrels per day. These exports have helped compensate for lost supplies from the Middle East and Russia. However, global diesel supplies are already constrained by conflicts and Russian export bans. The White House has denied preparing for a 90-day ban, with Energy Secretary Chris Wright stating it would not control surging prices. However, President Donald Trump has expressed support for a ban, and the administration is reportedly exploring alternatives like voluntary restraint on exports.