U.S. Energy Secretary: Blunt Tool of Banning Diesel Exports Doesn't Work

U.S. Energy Secretary Chris Wright told an audience in New York that banning diesel exports would be a "blunt tool" that would not solve high fuel prices and could worsen them, according to Reuters. Wright argued that restricting shipments would leave refiners with surplus diesel, prompting reductions in refinery runs that would tighten supplies of other refined products such as gasoline and jet fuel and push up consumer costs. Wright’s stance differs from comments by President Trump, who on Tuesday indicated he was receptive to limiting diesel exports amid a sharp rise in prices. The White House has tasked Treasury Secretary Bessent with assessing whether export restrictions are feasible. Markets reacted quickly: Bloomberg reported European diesel’s premium to Brent crude climbed above $95 a barrel on Wednesday, a record in its data back to 2011. Industry groups and analysts cited in reporting warned of broader disruption if U.S. exports were curtailed. The American Petroleum Institute said removing U.S. diesel from global markets could reduce refinery runs, harm the global economy and ultimately raise U.S. prices. Analysts estimate that an export ban could strand roughly 1.5 million barrels per day — about 20% of the roughly 8 million barrels a day traded internationally and about 29% of U.S. diesel output — creating regional surpluses on the Gulf Coast while leaving East and West Coast markets tight because of logistical and fuel-specification constraints. Market intelligence firms and energy analysts painted a scenario in which trapped barrels compress refiners’ margins, encouraging maintenance or cutbacks. Bloomberg Intelligence suggested Gulf Coast storage could absorb only around three weeks of net diesel exports before capacity limits bite, while S&P Global Energy estimated crude runs might need to fall by nearly 2 million barrels per day — more than 10% of current levels — to clear a potential surplus. Observers warned that any short-term U.S. price relief from export limits could therefore be followed by tighter global product markets and reduced fuel availability later.