Trump weighs US diesel export ban as Europe prepares reserves

Donald Trump has indicated that the United States may impose a ban on diesel exports to alleviate domestic price pressures, a move that could significantly disrupt global fuel markets. The President stated that he is seriously considering the restriction amid a widespread shortage of the fuel. This potential policy shift follows urgent calls from US Treasury Secretary Scott Bessent for European nations to immediately release their strategic diesel reserves. Bessent argued that American farmers, truckers, and businesses should not bear the sole burden of soaring costs, urging partners to accelerate delivery on existing commitments and make additional supplies available to address ongoing disruptions.

The issue has become a prominent concern for US voters ahead of the crucial midterm elections in November, where control of Congress is at stake. The President is scheduled to travel across the country to campaign for Republicans, aiming to retain control of both the House and Senate. In this political context, Trump has suggested that retaining surplus barrels of diesel within the United States would lower pump prices domestically, offering immediate relief to drivers and commercial operators. However, experts warn that such a ban could have severe repercussions for international markets, potentially causing prices to skyrocket in other countries that rely on American supply.

Britain has actively engaged with European partners to coordinate a response to the potential US export ban. On Thursday, Energy Minister Martin McCluskey held discussions with European counterparts regarding the release of diesel reserves. A source familiar with the talks noted that it was prudent to prepare a coordinated response with other nations, including those within the European Union. The source added that there were still European reserves remaining from a coordinated release of strategic fuel stocks earlier in the year. A government spokesperson emphasised that the UK has a diverse and resilient supply chain, continuing to engage with international partners and the fuel industry. While the government has stated there is no cause for concern regarding shortages, it acknowledged that prices are expected to rise further.

Global diesel prices have surged since the outbreak of the US-Israel war in Iran in February. The closure of the Strait of Hormuz, a vital route that typically transports around a fifth of the world’s oil and gas, has pushed up the cost of oil-derived products. Additionally, an export ban from Russia, another major supplier of diesel, has added to the pressure on prices. The US remains a vital supplier to the world, exporting between 1.2 and 1.5 million barrels per day. David Fyfe, chief economist at Argus Media, cautioned that cutting off American supply would likely cause international prices to increase sharply. Diesel is harder to refine than gasoline and is essential for the haulage industry and agriculture, making it difficult to reduce demand.

In the United Kingdom, diesel prices have hit record highs this week. According to the RAC, average pump prices are hovering just under 200p per litre, specifically at 199.79p, up from 142.38p. The UK is heavily reliant on imports for diesel, as its four refineries do not produce enough to meet domestic needs, despite producing sufficient petrol. There were 15.1 million diesel vehicles on UK roads at the end of June, a decrease from 15.7 million a year prior. This includes 9.8 million diesel cars, down from 10.4 million in the same period last year. A European Commission spokesperson confirmed that numerous calls and meetings are taking place regarding the diesel situation, including high-level contacts with the US administration.