Export ban talk sinks diesel, boosts gasoline as White House eyes options

It is that reaction to a possible diesel ban that has been raised by critics of the potential policy, of which there are many. A Wall Street Journal editorial criticizing a possible export ban was titled “Republicans are Running on Empty.”

The market reaction Wednesday came a day after President Trump signaled support for the ban, joined by several Republican lawmakers.

U.S. exports of ULSD in the week ended September 18 were 1.33 million b/d, a figure far less than recent weeks which have been mostly between 1.6 to 1.7 million b/d. Meanwhile, U.S consumption of non-jet fuel distillates, which is about 90% ULSD, has been running about 3.6 to 3.8 million b/d. Those export figures are higher than recent norms.

A report by S&P Global Energy summed up the potential impacts of a ban, without referring to the market reaction Wednesday that essentially backed its report with almost perfect accuracy.

Any surplus of diesel in the U.S. created by an export ban, S&P Global Energy said, “would create significant operational and financial pressure for imports, shifting yield away from diesel,” the report said. 

Cutting runs by 2-million b/d

The reaction among refiners, the report said, would be to reduce crude runs by about 2 million b/d “to eliminate the resulting diesel surplus.”

ULSD production in the U.S. has averaged just below 5 million b/d since the start of June. That’s about 150,000 b/d more than the corresponding period a year ago, but refiners have needed to run at about 97% of capacity to get there. 

Should U.S. refiners reduce runs by that amount, S&P Global Energy said, “a run cut of this magnitude would inevitably lower the supply of gasoline and jet fuel, raising prices of these fuels.” 

And that is precisely the reaction seen in futures markets Wednesday.

“Even with a 3% shift in yield from diesel to gasoline, the drop in gasoline production would cause the U.S. to become a net importer of gasoline in the fourth quarter of 2026, meaning that import-dependent regions in the East and West Coasts would be vulnerable to price shocks from more expensive imported fuel,” the report added.

Moving toward some sort of restriction

Where the White House stands on a ban remained murky late Wednesday but with some reports suggesting some sort of limitations are likely.

Chris Wright, the Secretary of Energy, was quoted by Politico as telling a New York energy forum during Climate Week that he was opposed to a ban.

“The blunt tool of banning diesel exports definitely doesn’t work because the U.S. exports a lot of diesel,” Wright said, according to the Politico article. “We’re the largest diesel exporter in the world, but that same refinery that produces diesel also produces gasoline and jet fuel. So, if you can’t export the diesel that comes out of our refineries when you run out of places to store it, and you have to reduce U.S. refining, which would put upward pressure on gasoline prices and jet fuel prices.”

But Politico also reported that there is a growing view in the administration that some steps need to be taken to give relief to those sectors of the economy that are getting hit with higher diesel prices, like trucking and agriculture.

A 90-day ban on exports, according to Politico, is under consideration. 

Bloomberg reported that Wright had “told oil industry leaders to brace for possible US curbs on diesel exports amid an intensifying debate within the Trump administration over that approach.”

“Wright’s message was delivered to company executives in calls late Tuesday, according to people familiar with the matter, hours after President Donald Trump said he’d encouraged administration officials to consider diesel export restrictions,” Bloomberg reported.

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