Trump says he is 'very seriously considering a diesel export ban'; Goldman Sachs analyzes the 'five impacts' of such a ban.

【Answer 1】 Goldman Sachs modeling: The ban is 'highly probable', possibly starting in October In its September 26 research note titled 'Modeling Potential U.S. Diesel Export Restrictions', Goldman Sachs analysts including Daan Struyven quantified a hypothetical scenario: — The ban would begin in early October 2026 and last at least through December (i.e., the 90-day ban discussed in media reports). — Analysts noted this is a 'highly plausible scenario, though not our base case expectation'. Impact One: Short-term decline in U.S. diesel prices Goldman Sachs expects mild downward pressure on U.S. diesel prices in the initial phase of the ban. Specific estimate: With storage tanks still having spare capacity, each additional week of the ban would reduce the U.S. retail diesel price by approximately $0.25 per gallon—nearly 4% of the current $6.50/gallon level. Logic chain: Export disruption → domestic inventory buildup → wholesale price pressure → retail price decline. Impact Two: Longer bans drive up gasoline prices This is the most notable counterintuitive effect highlighted by the bank. Diesel, gasoline, and jet fuel are highly interlinked in the refining process, with limited flexibility to shift output ratios. Once diesel inventories approach tank capacity, refiners will be forced to cut operating rates—not only reducing diesel output but also simultaneously constraining gasoline and jet fuel supply. Estimate: Once diesel tanks are full, each additional week of the ban would exert ~$0.30/gallon upward pressure on U.S. retail gasoline prices. Under Goldman’s base assumption—halting exports of 1.6 million barrels per day—the U.S. national diesel inventory would fill up within 9–10 weeks. However, the bank notes that refiners would likely begin cutting production *before* tanks reach full capacity, meaning gasoline price pressures would emerge earlier than this timeline suggests. Impact Three: Diesel prices rise outside the U.S. The ban’s shockwaves would extend well beyond U.S. borders. Europe and Latin America (e.g., Brazil, Mexico) are the primary destinations for U.S. diesel exports. The bank estimates that each additional week of the ban would lift European wholesale diesel (ARA diesel) prices by ~$3 per barrel—nearly 2%. However, Europe’s strategic petroleum reserves (SPR) may offset roughly half of this price increase. As of end-June, OECD member countries in Europe still held 190 million barrels of strategic diesel stocks—equivalent to nearly 500 days of U.S. diesel imports. Goldman also points out that supply shocks would quickly spill over into Asia—as Latin America and Europe compete for diesel supplies from countries like India. Impact Four: U.S. diesel prices rebound after the ban ends The price suppression caused by the ban would not be permanent. Goldman notes that once the ban is lifted, U.S. diesel prices would realign with European, Latin American, and Asian markets—leading to upward pressure on U.S. diesel prices and downward pressure overseas. Yet the bank stresses that global refined product prices post-ban would remain higher than the 'counterfactual' scenario where no ban was ever imposed. The reason: temporary reductions in U.S. refining capacity during the ban would leave global cumulative inventories below the no-ban baseline—a deficit difficult to close quickly. Impact Five: Goldman reiterates long European gasoline position Based on the above analysis, Goldman reiterates its hedge trade recommendation for geopolitical risk: go long 2027 European gasoline (e.g., EBOB Jun27).

If the U.S. bans diesel exports, will Europe be the biggest victim?

【Answer 2】 Global diesel prices have surged to record highs, while the U.S. government is contemplating a diesel export ban—a potential policy that would profoundly reshape the global energy market landscape. Trump has recently voiced support for the idea of banning diesel exports. According to Windfall Trading Desk, Morgan Stanley’s September 23 research report noted that if a full export ban were implemented, both domestic U.S. gasoline prices and overseas diesel prices would surge sharply. The report also assessed that the probability of a full ban remains low, though partial restrictions or phased regulatory measures are realistically possible. Why have diesel prices soared to historic highs? Tight global diesel supply has persisted for months, with price pressures converging along two parallel fronts. Approximately 1.5 million barrels per day (bpd) of Middle Eastern refining capacity is effectively unusable—partly because facilities lie within the Strait of Hormuz and thus face logistical constraints on outward shipments, and partly due to physical damage causing shutdowns—resulting in a ~500,000 bpd year-on-year decline in regional diesel exports. Meanwhile, around 3.5 million bpd of Russian refining capacity has been taken offline due to drone attacks, leading to an additional ~800,000 bpd year-on-year drop in Russian diesel exports. Combined, the supply shortfall from Russia and the Middle East totals 1.3 million bpd—roughly 15% of the global seaborne trade market’s average daily supply of 8 million bpd. On the pricing front, on September 15, NYMEX heating oil futures hit a record high of $5.26 per gallon (equivalent to $220 per barrel); U.S. retail diesel averaged a record $6.52 per gallon. Measured as the crack spread versus WTI crude, U.S. distillate spreads currently stand at ~$105 per barrel—four times the median level over the past 15 years. In response to mounting price pressures, the U.S. government has already rolled out a series of emergency measures—including a temporary waiver of the Jones Act (extended until November 15), repeated waivers of EPA fuel standards, nationwide exemptions from federal truck driver hours-of-service rules, and large-scale releases from the Strategic Petroleum Reserve. How would a full ban transmit to the U.S. domestic market? Understanding the potential impact of an export ban requires first clarifying the U.S. diesel supply-demand structure. The U.S. refining system processes ~16.5 million bpd of crude oil, producing ~5.1 million bpd of diesel. Domestic consumption stands at ~3.9 million bpd, leaving ~1.2 million bpd available for net exports—specifically, ~1.4 million bpd exported (mainly from the Gulf Coast) and ~0.2 million bpd imported (primarily into the U.S. East Coast). Morgan Stanley’s calculations show that if the full 1.4 million bpd diesel export flow were halted, domestic supply would improve initially, potentially lifting consumption by ~200,000 bpd toward its five-year average. Assuming continued Jones Act waivers and East Coast import demand being met by Gulf Coast supply, a surplus of ~1 million bpd would still accumulate—concentrated in the Gulf Coast region (PADD 3).

Latin America Most Exposed to Any US Ban on Diesel Exports, Goldman Sachs Says

15 hours ago

Goldman Sachs warns Latin America faces significant risk from a potential US diesel export ban, as imports account for over 50% of consumption in key nations. Such a cutoff could reduce regional GDP by 1% while driving up global fuel prices and inflation.

reuters

2026-10-01

Latin America Most Exposed to Any US Ban on Diesel Exports, Goldman Sachs Says

Latin America Most Exposed to Any US Ban on Diesel Exports, Goldman Sachs Says

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