"Refining" has become a global energy bottleneck—how close is the U.S. to imposing an export ban?

This wave of investment has more than doubled Middle Eastern diesel exports between 2017 and 2025, enabling the region—now accounting for 19% of global diesel exports—to overtake North America and become the world’s largest diesel exporter. Over the same period, Russia upgraded existing refineries to boost its diesel exports by one-third. However, following the U.S.-Israeli joint military strike against Iran in February this year, shipping through the Strait of Hormuz was disrupted, forcing Kuwait, the UAE, and Iraq to sharply cut exports. Escalating Houthi attacks have further constrained diesel exports from Saudi Aramco’s Red Sea refineries—the very facilities serving as the primary alternative route bypassing the Strait of Hormuz. Meanwhile, sustained Ukrainian drone strikes on Russian refineries have proven highly effective, nearly halting Russia’s diesel exports altogether. David Martin, Senior Oil Markets Analyst at the International Energy Agency (IEA), stated: “We are witnessing what may be the tightest diesel market ever recorded.” Insufficient refining capacity in the West fails to fill the supply gap Large-scale refining investments in the Middle East and Russia have long suppressed profit margins for Western refiners, leading to a persistent decline in capital investment—and leaving them ill-equipped to respond during today’s crisis. Alan Gelder, Senior Vice President for Refining, Chemicals, and Oil Markets at consultancy Wood Mackenzie, noted that when national oil companies build refineries, return on investment is often not the top priority; instead, governments emphasize job creation and energy security. By contrast, major Western oil companies have built no new refineries in nearly three decades, and over ten refineries in the U.S. and Europe have closed since 2015. Gelder remarked: “We’re seeing major oil companies actively reducing their exposure to this sector, as actual returns on capital have consistently been poor.” Gelder further cited an industry adage: “How do you turn a large fortune into a small one? Build a refinery.” Currently, Western refineries are operating near full capacity and have shifted production toward diesel—reducing gasoline and jet fuel output—but still cannot effectively bridge the supply shortfall left by the Middle East and Russia. The export ban debate: easing domestic pain—or harming the globe? Soaring domestic fuel prices are intensifying calls within the U.S. political sphere for an export ban, adding further uncertainty to this global supply tug-of-war. This week, Trump attributed the primary cause of rising diesel prices to the Russia-Ukraine war, claiming, “Global diesel price increases stem mainly from the Russia-Ukraine war—not Iran.” Yet IEA data shows diesel volumes blocked in the Persian Gulf are roughly three times larger than Russia’s supply shortfall—a clear discrepancy between the two assessments. Analysts warn that if the U.S. imposes a diesel export ban, prices elsewhere globally would surge further—and could prompt other major exporters to follow suit, worsening an already extremely tight global diesel market.

Reports say the Trump administration is considering a 90-day diesel export ban—later denied by the White House, while the U.S. Energy Secretary publicly opposed it.

Yet open divisions within the Trump administration have rendered policy direction highly uncertain. Energy Secretary Chris Wright bluntly declared at The Economist’s New York event the same day that banning diesel exports was “definitely unworkable,” warning it would force refineries to cut capacity—and thereby push up gasoline and aviation fuel prices. The Department of Energy subsequently issued a statement asserting that Wright “fully aligns with the President” and that both are “jointly exploring all viable options to lower energy prices,” seeking to downplay the rift. Soaring diesel prices heighten midterm-election pressure U.S. diesel prices are at record highs. According to the American Automobile Association (AAA), the national average diesel price stood at $6.52 per gallon on Wednesday—up 76% year-on-year. This surge follows escalating tensions in the U.S.-Iran conflict and the ongoing war in Ukraine, tightening global diesel supply continuously. Skyrocketing fuel costs have drawn sharp complaints from farmers and other diesel users—and have evolved into a core political challenge for the Republican Party. U.S. Agriculture Secretary Brooke Rollins has directly raised the issue of high diesel prices with the President, and Republican lawmakers representing fiercely contested districts are also pressuring the administration to act. A White House official said Trump “wants to see fuel prices fall and is evaluating all available options.” U.S. Energy Secretary: A ban would backfire Chris Wright’s opposition to the ban targets the policy’s fundamental contradiction. He explained that if diesel exports were banned, refineries would quickly run out of storage space—forcing them to reduce overall refining output. As a result, gasoline and aviation fuel production would fall in tandem, ultimately increasing price pressures on consumers. Analysts at energy consultancy TACenergy echoed this view in a report released Wednesday: “Losing export outlets would compel many refineries to cut operating rates, lowering output of gasoline and other products—and the final outcome would be counterproductive.” According to data from the U.S. Energy Information Administration (EIA), U.S. refinery utilization last week stood at approximately 94% of capacity. Wright stated the government is pursuing “simpler, voluntary, collaborative approaches” with the refining industry to increase domestic diesel supply—avoiding the use of a “blunt instrument” that would constrain refining capacity. However, he declined to disclose specifics of these initiatives and emphasized that no decisions have yet been made.

Major airline group opposes US diesel export ban, warning it could hike prices

11 hours ago

Airlines for America CEO Chris Sununu opposes a US diesel export ban, warning it will drastically raise fuel prices for carriers. The group has raised these concerns with the US Departments of Energy and Interior.

reuters

2026-09-24

Major airline group opposes US diesel export ban, warning it could hike prices

Major airline group opposes US diesel export ban, warning it could hike prices

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