The administration of President Donald Trump is considering a 90-day ban on diesel exports after prices in the United States jumped to a record 6.52 dollars per gallon this week, up nearly 76% from around 3.69 dollars a year ago, as economic and political pressures mount ahead of the midterm elections.
Refining constraints limit the impact of a ban
Halting exports could allow shipments bound for Europe and Asia to be redirected to the domestic market, temporarily lowering diesel prices in some areas, particularly the Gulf Coast, which has most of the country’s refining capacity. If implemented, the measure would be the first major restriction on U.S. energy exports since the lifting in 2015 of the decades-old ban on crude oil exports.
But the crisis is also linked to limited global capacity to turn crude oil into fuel, following reduced energy flows through the Strait of Hormuz and the Bab el-Mandeb, damage to refineries in the Middle East, Ukrainian attacks on Russian refineries, successive Chinese restrictions on refined petroleum product exports, and cuts in some shipments by Japan and South Korea. Sergei Vakhrukov of the Carnegie Russia Eurasia Center said the global market fundamentally lacks refining capacity.
U.S. refineries are operating at around 94% of capacity, according to Energy Information Administration data, with operating levels nearing their maximum after record profit margins were posted in the second quarter. An export ban would not add new refining capacity; it would merely redistribute existing supplies.
Risk of lower gasoline and jet fuel production
Refineries produce diesel, gasoline, jet fuel and other products from the same refining process. U.S. Energy Secretary Chris Wright warned that being unable to export diesel could fill storage facilities and force refineries to cut operations, reducing output of other fuels. He described the ban as a blunt instrument that would not achieve the desired result, noting that the United States is the world’s largest diesel exporter.
S&P Global estimated that a full ban could force refineries to cut processing by around 2 million barrels per day, equivalent to roughly 12% of total U.S. refinery throughput, while gasoline production could fall by as much as 750,000 barrels per day. Analysts estimate that this could add around 25 cents to the price of a gallon of gasoline, which currently averages 4.47 dollars.
Bob McNally, president of Rapidan Energy Group and a former White House adviser, said the Gulf Coast could see a temporary decline in prices, while other coastal areas could face potential increases, before higher costs emerge more broadly if investment is hit. David Oxley, chief climate and commodities economist at Capital Economics, also warned that a ban would intensify existing pressures in the global diesel market and could backfire in the United States.
U.S. exports fill a global gap
Estimates of U.S. diesel exports have ranged from around 1.4 million barrels per day to more than 1.6 million barrels per day in recent weeks, compared with around 1.1 million barrels before the Iranian war began on 28 February. According to the American Petroleum Institute, the United States supplies around 20% of the nearly 8 million barrels of diesel traded by sea each day.
By contrast, the Energy Information Administration forecast this month that diesel inventories would fall below 100 million barrels after touching a five-year low in 2025. Mike Sommers, president of the American Petroleum Institute, said higher diesel costs stemmed from unprecedented disruption to global refining capacity and that restricting U.S. energy exports would make the problem more complicated.
Refineries face an additional challenge because large parts of the refining system rely on heavier, higher-sulfur crude, while U.S. shale oil is generally light and low-sulfur. Trade restrictions could intensify competition for heavy crude or force refineries to use less suitable grades, raising costs and reducing efficiency.
Election pressure and opposition within the administration
Calls for action have grown as farmers’ incomes have been hurt by higher diesel prices, particularly in agricultural states. Republican Senator Chuck Grassley of Iowa said high prices were damaging farmers’ incomes, while Representative Ashley Hinson said state residents should not have to bear the cost of the war in Iran at fuel pumps or retail stores. The pressure comes ahead of the 3 November elections.
Opposition to the ban has also emerged within the administration, with Energy Secretary Chris Wright, Treasury Secretary Scott Bessent and Interior Secretary Doug Burgum opposing a full ban. Thirty-six business and industry groups also signed a letter opposing the restrictions, including the American Petroleum Institute, the American Fuel & Petrochemical Manufacturers, the Business Roundtable and the U.S. Chamber of Commerce.
Dan Eberhart, chief executive of oilfield services company Canary and a Trump donor, said U.S. companies had invested heavily in building overseas markets and that a ban would send the wrong signal to customers. Burgum warned that exporting countries could take retaliatory steps to limit fuel supplies to the United States, particularly in import-dependent regions such as the West Coast.
The energy sector fears that the 90-day ban could set a precedent for future interventions, drawing on the experience of tariffs, price controls and energy-market management in the 1970s. Regulatory risks could raise the cost of investment and reduce the incentive to add new refining capacity.
Jim Mitchell, director of oil trade analytics at Wood Mackenzie, said that even with emergency powers, there was no mechanism that could lower diesel prices within one week. Wright proposed a voluntary arrangement to redirect diesel flows instead of a blanket ban, as the administration faces a choice before the November elections between temporarily lowering prices and risking declines in refinery operations and gasoline and jet fuel production.
