Refining capacity 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, traffic 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 primary alternative route bypassing the Strait of Hormuz. Meanwhile, Ukraine’s sustained 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.” Western refining capacity insufficient to fill supply gaps Large-scale refining investments in the Middle East and Russia have long suppressed profit margins for Western refiners, leading to a continuous decline in capital investment—and leaving them ill-equipped to respond during this 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; governments instead emphasize job creation and energy security. In 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 observed: “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 a widely circulated industry quip: “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 fill the supply gap left by the Middle East and Russia. The export ban debate: easing domestic pain—or harming the globe? Soaring domestic fuel prices are intensifying political calls within the U.S. for an export ban, adding uncertainty to the global supply balancing act. This week, Trump attributed soaring diesel prices primarily 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 shortfall—a clear divergence in assessment. Analysts warn that if the U.S. imposes a diesel export ban, prices elsewhere 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, but the White House later denied it; the U.S. Energy Secretary publicly opposed it.

The Trump administration is evaluating a diesel export ban to curb high fuel prices—but internal policy disagreements have become public. Energy Secretary Chris Wright explicitly stated such a ban would be ineffective and could raise gasoline and aviation fuel prices, directly contradicting Trump’s position. According to a Politico report on Wednesday—citing five unnamed sources—the Trump administration is preparing a 90-day diesel export ban aimed at lowering persistently high energy prices amid mounting political pressure on Republicans ahead of the November congressional midterm elections. Following the Politico report, U.S. diesel futures plunged sharply—falling over 7% at one point—while European diesel futures surged. But shortly afterward, Reuters quoted a White House official who posted on X (formerly Twitter) stating that Politico’s report about the administration preparing a 90-day diesel export ban was inaccurate. U.S. diesel futures rebounded somewhat but failed to fully recover the losses triggered by the Politico report. Nonetheless, the administration’s open internal rift has rendered the policy’s trajectory highly uncertain. Energy Secretary Chris Wright, speaking the same day at The Economist’s New York event, bluntly declared a diesel export ban “would certainly not work,” warning it would force refineries to cut output—thereby driving up gasoline and aviation fuel prices. The Department of Energy subsequently issued a statement asserting Wright “fully aligns with the President and is jointly exploring all viable options to lower energy prices,” seeking to downplay the disagreement. 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 U.S.-Iran tensions and the ongoing conflict in Ukraine, both contributing to persistent global diesel supply tightness. Skyrocketing fuel costs have drawn sharp complaints from farmers and other diesel users—and have evolved into a core political challenge for Republicans. U.S. Agriculture Secretary Brooke Rollins has raised the issue of high diesel prices directly with the President, while Republican lawmakers representing competitive districts have also ramped up pressure, demanding government action.

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Morgan Stanley warns a US diesel export ban could raise gasoline prices by forcing refiners to cut production by 2 million barrels daily. Domestic diesel prices may fall while global markets face increased volatility and higher overseas costs.

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