How a U.S. diesel export ban would play out, according to Goldman Sachs

By Nora Redmond

U.S. diesel prices were $6.45 per gallon on Monday, according to AAA.

With the White House considering a potential diesel export ban, Goldman Sachs strategists have estimated how such a ban would play out.

President Donald Trump said last week he would support a ban on U.S. diesel exports to help bring down costs after they recently reached their highest level at $6.53 a gallon. Prices are currently hovering at the $6.45 mark, according to AAA, up 75% since this time last year.

Strategists at the New York-headquartered investment bank, led by Daan Struyven, head of oil research, wrote in a note over the weekend that if a ban is implemented, as stocks build, gasoline prices would likely temporarily ease. For as long as storage remains available, they see prices falling by $0.25 per gallon.

How long would storage remain available? The strategist estimate that diesel would be stored up after nine to ten weeks, and possibly sooner. And the diesel ban could spill over into the price of other products.

"The longer a diesel export ban lasts, the more disruptive it would likely be by putting upward pressure on gasoline prices because diesel, gasoline, and jet fuel are largely produced together," the strategists said.

They added that a decline in the production of diesel would then be associated with a fall in gasoline production - leading to price rises there too.

"As U.S. diesel stocks near storage limits, downward pressure on diesel prices would intensify, compressing U.S. refining margins, and likely incentivize U.S. refiners to reduce output," the team wrote.

Once storage is full if a U.S. diesel export ban is in place, they forecast U.S. retail gasoline prices increasing by $0.3 a gallon every week.

For Goldman, restrictions in the U.S. would have a ripple effect across diesel prices internationally, with each week of the ban lifting European diesel prices by just below 2%. But, it noted that strategic releases of diesel stockpiles in Europe could offset about half of the price spike.

Even when the ban is removed, U.S. diesel prices would then likely reconnect with international prices, including in Europe, the strategists said, bringing U.S. diesel prices upward and prices abroad downward. However, prices outside the U.S. would likely still be higher than they would have been without the ban being set in motion.

Goldman see eventual restrictions on U.S. diesel exports as "very plausible," and to prepare, the strategists recommend hedging geopolitical risk by taking long positions in European gasoline as its supply continues to tighten. They also said Europe's strategic reserves of gasoline are four times smaller than its stockpile of diesel.

-Nora Redmond

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09-28-26 0532ET