A proposed U.S. ban on diesel exports, meant to cool record pump prices, could instead push gasoline and jet fuel costs higher, analysts warn. Cutting exports would fill domestic storage within a little more than a month and force refiners to cut crude runs, shrinking supply of every fuel they produce. The squeeze is already showing up in crude markets, where WTI trades well below Brent.
Blocking U.S. diesel exports to fight soaring pump prices could end up raising fuel costs across the board, according to analysts tracking the proposal. Retail diesel hit an all-time high above $6.50 a gallon last week, prompting lawmakers to propose a temporary export ban, a move President Trump has signaled he would support.
Energy Secretary Chris Wright has pushed back, arguing that blocking exports would force refiners to cut runs because storage would run out, which would then pressure gasoline and jet fuel prices upward.
Storage would fill within a month
Wood Mackenzie estimates that a 90-day export ban would redirect about 700,000 barrels of diesel and gasoil into storage, filling available tank space within a little more than a month. As a result, refiners would need to cut run rates by roughly 2 million barrels a day, which would also curb gasoline output. Refiners could offset the loss by exporting more crude instead, but that shift runs into a separate constraint: spare refining capacity outside the U.S. sits almost entirely in China, and Beijing may not choose to use it to absorb American barrels.
Gasoline could bear the cost
Wood Mackenzie's senior vice president for refining, chemicals and oil markets, Alan Gelder, said the policy risks shifting the burden from one fuel to another: cutting crude runs to manage the diesel glut would reduce gasoline supply too, meaning a measure aimed at diesel relief could end up lifting prices at the gasoline pump instead.
WTI's discount to Brent widens
The export-ban debate has already moved crude oil markets. WTI is trading at a $12 discount to Brent, even as both benchmarks post gains after Trump rejected Iran's proposed peace deal at last week's UN General Assembly session.
Limited refining capacity abroad is blunting the demand boost U.S. crude would normally see from that discount. Freight costs add to the pressure: according to Signal Maritime data, a VLCC voyage from the Gulf Coast to Asia now costs about $50 million, up from $16 million before the U.S.-Israeli war with Iran began in late February.
U.S. refiners currently produce 5.1 million barrels of diesel daily and export 1.2 million barrels, against domestic consumption of about 3.6 million barrels. On paper, supply covers both markets — but because diesel and crude trade on global benchmarks, a ban would still transmit price shocks back into the domestic market it is meant to protect.
Source: Oilprice.com
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