Trump Floats Diesel Export Ban as Fuel Prices Explode

Trump endorsed banning US diesel exports as pump prices top $6.50 a gallon, a move that would hit Europe and Latin America hardest.

Diesel surpassed $6.50 a gallon at US pumps on Tuesday, September 22, and shortly afterward President Trump publicly backed banning diesel exports for the first time, telling reporters, "I've said let's not send out the diesel," after meeting Ukraine's Volodymyr Zelensky at the UN General Assembly. According to EL PAÍS, Politico reported the next day, citing five sources familiar with the matter, that the White House is planning a 90-day export ban running until the end of the year — the peak season for diesel demand in North America and Europe. Diesel exports have never been banned before; only crude exports were, until Congress lifted that ban in 2015 under President Obama.

The move would upend decades of US energy policy and comes from a president whose own war against Iran, launched in February, helped create the global fuel squeeze in the first place. EL PAÍS reports that global refining capacity has dropped by roughly five million barrels per day because of the wars in Iran and Ukraine and Ukrainian strikes on Russian refineries, leaving no spare capacity to absorb a US withdrawal. The proposal is dividing even the administration: EL PAÍS reports Energy Secretary Chris Wright and Interior Secretary Doug Burgum have expressed doubts, while the powerful US oil lobby opposes it — and analysts warn reduced refinery margins would eventually push gasoline prices up at home.

The market reacted immediately to Trump's words. EL PAÍS reports that diesel prices on the London market rose 7% after the announcement, even as crude oil stayed relatively stable. The US enters this episode with little cushion: American refineries are running at 97% of maximum capacity, yet diesel reserves are 13% below the five-year average, according to EL PAÍS. In Europe, Eurostat figures published September 22 show the price of fuels and lubricants soared almost 24% year-over-year in August, and Goldman Sachs analysts warned on September 23 that lower refining margins would cut total processing volumes and drive up US gasoline prices.

Europe and Latin America are the main buyers of American diesel. EL PAÍS, citing data from Kpler, reports that six of the seven largest buyers of diesel processed in US refineries — roughly 1.5 million barrels per day — are in Europe or Latin America: Brazil, Chile, Mexico, Peru, France and the United Kingdom, with Morocco the only exception. Rystad Energy's Jorge León told EL PAÍS that almost a third of US diesel exports go to South America, which would be hardest hit, with Central America taking the combined total to nearly half. Europe produces about 70% of its diesel domestically, so stations would not run dry, but the US supplied a third of European diesel imports this year — half in August — and about a tenth of total consumption, per EL PAÍS.

With November midterms approaching and polls showing Republicans losing, EL PAÍS describes the ban as an almost desperate attempt to signal to voters — particularly midwestern senators from states like Iowa, Nebraska, Michigan, Kansas and Texas who are pressing hardest for it. Gonzalo Escribano of the Elcano Royal Institute warned EL PAÍS the measure is simplistic: it might briefly relieve farmers and truckers, but would mean higher gasoline prices later and, in the medium and long term, a significant loss of confidence in the United States as a reliable supplier. The timing compounds a broader energy squeeze: the seven-month Iran war has disrupted oil flows through the Strait of Hormuz, and Iran told Reuters via a senior official it will show no flexibility on its nuclear program even under a peace deal.

The plan, per Politico reporting cited by EL PAÍS, would run 90 days to year-end, but it still faces significant obstacles: divided opinion inside the White House, oil-industry opposition, and the risk that cutting exports to win an electoral signal backfires by lifting domestic gasoline prices. Meanwhile the US is deepening its Western Hemisphere engagement even as it contemplates cutting the region's fuel supply — at UNGA this week, the Atlantic Council reports the US and Argentina announced the Andes-Atlantic Corridor with up to $7 billion in Export-Import Bank financing, and Trump held his first meeting with Venezuela's interim president Delcy Rodríguez. If the ban goes ahead, Latin American and European buyers will be scrambling to replace 1.5 million barrels a day.