US Diesel Ban: Implications of Cheaper Diesel on Gasoline Prices
A potential restriction on U.S. diesel exports could lead to a complex shift in fuel prices, according to Goldman Sachs. While diesel prices in the U.S. may initially decrease as more fuel remains domestic, gasoline prices could rise if refiners are compelled to cut production. The bank noted that a ban on diesel exports, possibly starting in early October and lasting through at least December, is among the scenarios being considered, although it is not the base case.
Impact on U.S. Diesel Prices
The immediate effect of the export restrictions would be felt in the U.S. diesel market. With fewer exports, domestic inventories would increase, potentially putting downward pressure on diesel prices. Goldman Sachs estimates that a 90-day export ban could lower average U.S. retail diesel prices by approximately $0.25 per gallon each week, provided there is sufficient storage capacity. Currently, U.S. diesel exports have risen from 1.1 million barrels per day in 2025 to about 1.6 million barrels per day recently, while the national average retail diesel price has reached $6.50 per gallon.
However, if diesel inventories continue to rise and storage space becomes limited, the decline in prices may not persist. Goldman Sachs suggests that U.S. diesel inventories could fill up within 9 to 10 weeks if exports drop significantly. In practice, this timeline could extend as refiners might reduce production and demand could increase. Once storage capacity is constrained, refiners could face pressure, leading to reduced refining margins and a potential cut in output, which would also affect gasoline and jet fuel production.
Effects on Gasoline Prices
As diesel prices fall, the potential for rising gasoline prices emerges. Goldman Sachs estimates that once diesel storage reaches capacity, each additional week of an export ban could exert upward pressure of around $0.30 per gallon on U.S. retail gasoline prices. Furthermore, gasoline prices might begin to rise even before diesel storage is fully utilized, as refiners may preemptively cut production.
Global Implications
The ramifications of U.S. diesel export restrictions could extend beyond domestic borders. Goldman Sachs anticipates that diesel prices in Europe and other markets would increase if U.S. exports are curtailed, estimating a rise of about $3 per barrel in European wholesale diesel prices for each week of an export ban. However, the impact may be mitigated by releases from European strategic reserves, which could offset roughly half of the anticipated price increase. The effects of a temporary export ban could persist even after restrictions are lifted, as U.S. diesel prices would likely realign with international prices, but global refined-product prices may remain elevated due to reduced inventories from temporary cuts in U.S. refinery output.
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