Trump Reportedly Plans 90-Day Diesel Export Ban: Global Scramble for Oil Begins, Allies Under Pressure as Oil Prices Heat Up Again

Foreign media, citing unnamed sources, reported that the US government is preparing a 90-day diesel export ban. The legal process for the ban remains unclear, but US President Trump favors rolling it out before the weekend. If implemented, it would be the most comprehensive move yet by the Trump administration to curb soaring fuel prices, and it also highlights the pressure Republicans face ahead of the November midterm electionstheir control of Congress could be at risk. It is said that once the ban takes effect, it will force countries such as Brazil and the UK to scramble for diesel, further driving up prices that are already near record highs amid the Iran war choking off global supply. Trump said earlier this week that because the wars in Iran and Ukraine have pushed diesel prices to record highs, he has encouraged advisers to support banning US diesel exports. Still, energy industry figures remain firmly opposed to potential export restrictions, saying they would only bring short-term price relief and would instead lead to higher fuel costs afterward. American Automobile Association (AAA) data show that US retail diesel prices have soared to a record high, breaking above $6.50 per gallon. After the report was published, US diesel futures fell sharply in response, at one point dropping more than 7%, before recovering some losses; European diesel futures jumped. Key US allies will come under pressure If the measure takes effect, Latin America will bear the biggest short-term impact. Data from energy analytics firms such as Kpler and Vortexa Ltd. show that so far in September, agricultural powerhouse Brazil has been the largest buyer of US-produced diesel and similar fuels. This coincides with the start of Brazil's planting season and other harvesting activities, with farmers using diesel in tractors and trucks, boosting demand. Chile uses large amounts of diesel in mining equipment, while Mexico, the UK and the Netherlands are also among the top five diesel recipients this month. At the same time, the US has become a key supplier, with exports surging to a record high of nearly 2 million barrels per day this summer. US retail diesel prices have soared to a record high above $6.50 per gallon, intensifying inflation concerns and prompting calls to restrict overseas shipments. Although Trump has said he encouraged advisers to support an export ban, and reports say his administration is drafting a 90-day export suspension plan, the US has not yet announced any restrictive measures. Energy Secretary Chris Wright said the government is working with refiners to encourage voluntary export reductions as an alternative to a full ban. However, if the Trump administration halts diesel exports, it will deal a blow to key allies already facing high fuel, food and consumer goods costs as the Iran war disrupts global supply chains. Because diesel is critical to agriculture, heating, freight and manufacturing, higher fuel prices could ripple through the entire global economy. Even the mere possibility of a ban has already pushed up Europe's diesel benchmarklow-sulfur diesel futureswhile US diesel futures have retreated from a four-year high. A White House spokesperson did not immediately respond to a request for comment. The US role in the global diesel market has become increasingly important after tanker traffic through the Strait of Hormuz effectively stopped this spring. Months later, fuel shipments from the region remain restricted, and the war still shows no sign of resolution. After Russia banned fuel exports in July due to Ukrainian drone attacks on its refineries, US supply became even more critical. Russia's move cut off a major diesel source for countries such as Brazil, whose retail fuel prices are currently just off record highs for this time of year. S&P Global Energy analysts William O'Neil, Brian Stetter and Debnil Chowdhury wrote in a report that a ban would further upend global fuel markets. "Given Latin America's lack of idle refining capacity and its clear lack of alternative import sources, a sudden complete cutoff of US diesel could cause local prices to spike sharply, raising costs for consumers and businesses," the analysts wrote. The outlook for Europe is also not optimistic. Europe has become increasingly dependent on US supply to make up for lost cargoes from the Middle East and Russian flows to Turkey. "Although Europe's exposure is proportionally smaller than Latin America's, a disruption to US exports to Europe could have similar negative economic effects and trigger knock-on effects in other refined products, as European refiners seek to maximize diesel yields to offset the losses," the analysts wrote. Export patterns change from month to month, so countries that relied on US diesel last October, such as France and Germany, could also be caught off guard this year. Overall, an export ban would push up global prices and even affect countries that do not import US fuel. Analysts: Export ban does more harm than good Trump has recent precedent for considering an export ban. When fuel prices soared during former President Joe Biden's term, his administration also weighed restricting overseas shipments, but ultimately abandoned the idea after industry warnings that such measures would raise domestic costs and hurt allies in Europe and Latin America. Kevin Book, managing director at ClearView Energy Partners, said Trump may not have similar concerns. "The reality is that President Trump views these alliances differently, and he has room to make an 'America First' decision," Book said. Republican US Senate candidates, as well as some Democrats, are again calling for an export ban to lower prices less than two months before the midterm elections, aiming to provide relief to farmers and homeowners squeezed by high costs. But industry officials and analysts warn that an export ban would do more harm than good, raising prices in some parts of the US while discouraging domestic refiners from processing crude. US refineries are concentrated along the Gulf Coast, while pipelines to population centers on the East Coast are running at or near full capacity. The market lacks enough tankers to move fuel to the West Coast, meaning prices there could still rise despite export restrictions. "A diesel export ban would backfire. It would mean less US fuel production, tighter supply, lower energy security, and higher prices for Americans," said Geoff Moody, senior vice president of government relations and policy at the American Fuel & Petrochemical Manufacturers, an industry group representing refiners. "There is no upside, which is why administrations of both parties have repeatedly chosen to oppose fuel export bans." The specific form of the ban remains uncertain, including whether it would be a complete halt to shipments or include a transition period to allow cargoes already in transit to reach their destinations. It is also unclear whether the ban can find a solid legal basis. Analysts say the International Emergency Economic Powers Act allows the president to restrict exports during a national emergency involving an "unusual and extraordinary threat," but any restrictions could be immediately challenged in court. Still, consultancy Rapidan Energy believes the president's power to ban exports is "beyond doubt."