Trump's diesel-export ban talk sends European gasoil up 7% — then the White House walks it back

Talk of a US diesel export ban whipsawed energy markets on Wednesday: European gasoil futures surged as much as 7% intraday before giving back some gains after the White House denied a report that it is preparing a 90-day ban and Energy Secretary Chris Wright said a ban 'definitely doesn't work.'

The talk started Tuesday, when President Trump said at a UNGA-sidelines meeting with Volodymyr Zelenskyy in New York that he backs the idea of banning US diesel exports. 'I've said 'let's not send out the diesel,'' Trump said, adding he had 'called for it within my people.' He said a decision would come 'fast, one way or the other.' Treasury Secretary Scott Bessent said officials are examining whether a ban is feasible 'in terms of the overall refining capacity and whether a full or partial ban would work.'

On Wednesday, Politico reported that the White House is preparing an outright 90-day diesel export ban, citing five people familiar with the discussions, with Trump leaning toward announcing it by week's end. The White House denied the report — an official told Politico: 'This is another fake news news story from Politico.' ICE gasoil futures, Europe's diesel benchmark, rose almost 7% in London on Wednesday morning to $1,528 a metric ton — more than $200 a barrel equivalent — before easing to $1,494 after Energy Secretary Chris Wright questioned the merits of a complete ban, according to SFG Media's Wall Street Journal-attributed reporting. The contract's year-to-date gains stand above 135%.

Wright pushed back hard on Wednesday. 'The blunt tool of banning diesel exports definitely doesn't work,' he said at an event hosted by the Economist in New York. In a separate interview at the Journal's Journal House during UNGA, Wright said the administration would not stop all diesel exports and favored voluntary limits instead — refiners would be asked to redirect supply rather than ordered to. Wright warned that blocking exports could leave refiners with nowhere to put excess diesel, eventually forcing them to cut refinery runs and putting upward pressure on gasoline and jet fuel prices. Interior Secretary Doug Burgum has also argued against a ban.

US futures felt the whiplash too. The October ULSD contract fell about 4% to $4.7437 a gallon on Wednesday after earlier declining more than 6%, while the more-active November contract was down 9.15 cents to $4.6710 a gallon at midday, according to OPIS data carried by Dow Jones Newswires. European diesel refining margins rose to a record high on Wednesday, Reuters reported.

The backdrop is a diesel market under severe strain. The AAA national average for diesel hit a record of about $6.52 a gallon on Wednesday, up 76% from a year earlier; gasoline averaged $4.47. US diesel inventories have dropped below 97 million barrels, about 13% less than the five-year seasonal average, according to Reuters. Wars in Iran and Ukraine have sharply cut exports from Russia, Saudi Arabia and the United Arab Emirates, while Ukrainian strikes on Russian refineries and attacks on Middle East refineries have tightened supply further.

The United States is the world's largest diesel exporter, accounting for about 20% of globally traded seaborne diesel — roughly 1.5 million of the 8 million barrels shipped by sea each day, according to American Petroleum Institute data. US exports surged to a weekly record of nearly 2 million barrels a day last month. 'Banning exports means the rest of the world needs to find 1.5 million barrels per day that they previously bought from the USA,' said Andy Lipow of Lipow Oil Associates.

The refining industry warns a ban would backfire. A full ban could force US refiners to cut crude processing by about 1.9 million barrels a day — roughly 12% of throughput — knocking about 750,000 barrels a day off US gasoline production and potentially making the country a net gasoline importer in the fourth quarter, according to S&P Global Energy CERA analysis. Under that scenario gasoline prices could rise about 25 cents a gallon. TD Cowen analysts say a limited export quota — on the order of a 200,000-barrel-a-day export cut — could partially insulate the domestic market without the severe consequences.

The pressure is political as well as economic. Senate Majority Leader John Thune supports exploring a ban, Senator Chuck Grassley of Iowa has called for one, and Republican candidates in competitive races pressed the administration to act on fuel costs ahead of the November 3 midterm elections.

For now, no ban exists — Wednesday's news was a denial and a pivot to voluntary measures. What to watch: whether Bessent's feasibility review produces a formal proposal, whether refiners agree to voluntary export limits, and whether gasoil's record run resumes if the talk hardens into policy.