A replay of the 1970s? Market buzzes: Will the U.S. impose an 'oil export ban'?

Direct attacks on upstream gas fields—or tanker strikes and strait blockades—are fundamentally different: the former is akin to blowing up a 'well', with repair timelines potentially lasting years, not merely unclogging a 'pipe'. The ghost of 1973 Historically, following the 1973 Arab oil embargo, the U.S. Congress imposed an oil export ban amid surging gasoline prices. This ban remained in place for over 40 years—until it was lifted by Congress in 2015. According to Axios, citing Glenn Schwartz, Director of Energy Policy Services at consulting firm Rapidan Energy Group: When Congress lifted the export ban in 2015, it explicitly preserved the authority to reinstate it. Goldman Sachs’ report likewise notes that the U.S. government currently holds the legal authority—under the International Emergency Economic Powers Act (IEEPA)—to restrict oil exports; this tool remains legally available for activation. Meanwhile, export restrictions are already emerging globally: China has curbed refined product exports, Thailand has suspended petroleum exports, and South Korea has imposed caps on fuel exports. Glenn Schwartz stated: Export restrictions are not currently under consideration—but if oil prices surge sharply and remain elevated, the government will be forced to consider highly unconventional response measures. Even Trump himself suggested on Thursday that higher oil prices might benefit Americans—though most of those gains would accrue to oil companies. Goldman Sachs: The ban’s practical impact would likely be limited—and its side effects substantial Even if implemented, Goldman Sachs assesses that an export ban’s real-world effect would likely fall far short of expectations—and carry significant costs. Regarding crude oil exports specifically, Goldman Sachs explicitly points out that the U.S. remains a net crude importer. Restricting exports would depress WTI prices relative to global benchmarks like Brent, inflate domestic crude inventories, and ultimately dampen U.S. shale oil production—contradicting the very policy goal of stabilizing domestic energy supply. If crude export restrictions were imposed, the most immediate impact would be further weakening of WTI relative to international benchmark prices (e.g., Brent). Crude trapped within the U.S. would push up domestic inventory levels and ultimately suppress incentives for U.S. shale oil production. Notably, markets have already begun pricing in this logic: over the past seven days, the WTI-Brent spread has widened by $2.50—a partial reflection of market anticipation of potential export restrictions. Restrictions on refined product exports present an even more complex scenario, with markedly divergent impacts across regions. Goldman Sachs data shows that the U.S. Gulf Coast region (PADD3) is the nation’s primary net exporter of refined products, averaging a net export volume of 5.183 million barrels per day in 2025; whereas the U.S. East Coast (PADD1) is a net importer, with a net import volume of 436,000 barrels per day. Once refined product exports are restricted, Gulf Coast refiners’ profits would be hit first—and local retail fuel prices could decline under pressure. For East Coast consumers, any potential benefit hinges on two critical conditions: first, whether other countries can sustain sufficient export volumes to the U.S. East Coast; and second, whether the Gulf Coast’s refinery profit erosion leads to only limited capacity cuts—allowing surplus refined products to be shipped eastward (e.g., via vessel transport, possibly facilitated by a temporary suspension of the Jones Act).

Refining emerges as a global energy bottleneck—how close is the U.S. to an 'export ban'?

This wave of investment doubled Middle Eastern diesel exports between 2017 and 2025, lifting the region’s share of global diesel exports to 19%—making it the world’s largest diesel exporter, surpassing North America. Over the same period, Russia upgraded existing refineries to boost its diesel exports by one-third. Yet after the U.S.-Israeli joint strike on Iran in February, traffic through the Strait of Hormuz was disrupted, forcing Kuwait, the UAE, and Iraq to slash exports significantly. Escalating Houthi attacks have also constrained diesel exports from Saudi Aramco’s Red Sea refineries—the key alternative route bypassing the Strait of Hormuz. Meanwhile, Ukrainian drone strikes against Russian refineries continue to take effect, nearly halting Russia’s diesel exports altogether. David Martin, Senior Oil Markets Analyst at the IEA, stated: We are witnessing what may be the tightest diesel market ever recorded. Western refining capacity insufficient to fill the supply gap Large-scale refining investments in the Middle East and Russia have long suppressed Western refiners’ profit margins, causing sustained capital underinvestment—leaving them ill-equipped to respond in times of crisis. Alan Gelder, Senior Vice President for Refining, Chemicals, and Oil Markets at consulting firm Wood Mackenzie, noted that when national oil companies build refineries, return on investment is often not the top priority; governments instead emphasize job creation and energy security. By contrast, Western major oil companies have built no new refineries in nearly three decades—and since 2015, over ten refineries have shut down across the U.S. and Europe. Gelder remarked: We see major oil companies actively reducing their exposure to this sector, given persistently poor capital returns. Gelder further cited a widely circulated industry quip: How do you turn a large fortune into a small one? Build a refinery. Today, Western refineries are operating near full capacity and have shifted output toward diesel—reducing gasoline and jet fuel production—but still cannot effectively fill the supply gap left by the Middle East and Russia. The export ban debate: Relieving domestic pressure—or harming the global market? Amid soaring domestic fuel prices, calls for an export ban are intensifying within U.S. political circles—adding uncertainty to this global supply contest. Trump this week attributed rising diesel prices primarily to the Russia-Ukraine war, stating, 'Global diesel price increases stem mainly from the Russia-Ukraine war—not Iran.' Yet IEA data indicates that diesel volumes blocked in the Persian Gulf are roughly three times larger than Russia’s shortfall—highlighting a clear discrepancy between these assessments. Analysts warn that if the U.S. imposes a diesel export ban, prices elsewhere would surge further—and could prompt major exporting nations to follow suit—exacerbating an already severely strained global diesel market.

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