US diesel futures fall after report of export ban plan, which the White House denies

US ultra-low-sulfur diesel futures experienced a 4% drop on Wednesday following reports of a potential export ban from the White House, which the administration promptly denied. At present, average US diesel prices are hovering near record levels, sitting at $6.52 a gallon, according to AAA. This surge in prices is putting pressure on sectors that heavily rely on diesel, including farming, transportation, and various industries.

The ongoing conflicts in Iran and Ukraine have significantly reduced exports from key producers such as Russia, Saudi Arabia, and the United Arab Emirates. A White House official clarified that the administration was not considering a flat, temporary export ban, refuting a report by Politico.

The October diesel futures contract was trading at $4.7437 per gallon, down 4% from its previous level, which had fallen more than 6%. President Trump had previously expressed support for a ban on diesel exports, with Republican candidates in close election races proposing the measure to alleviate record fuel prices.

The US Energy Secretary, Chris Wright, stated on Wednesday that a US ban on diesel exports would not be effective and could potentially increase gasoline and jet fuel prices. The administration is reportedly working with the refining industry to boost the supply of US diesel through a more voluntary and cooperative approach, rather than employing drastic measures that could diminish refining throughput. However, no formal decisions have been made regarding such a plan.

Wright emphasized that any potential ban on diesel exports would result in a global price increase, noting that European diesel refining margins reached a record high following Trump's comments. Analysts have warned that such a ban would lead to decreased prices in the United States, negatively impacting the refining margins. A ban on diesel exports could prompt refineries to reduce the volume of crude they process, subsequently lowering the supply of gasoline and other products, which might drive up their prices, according to traders and analysts.

U.S. Interior Secretary Doug Burgum had previously suggested that bans on oil, gasoline, or diesel exports could provoke retaliation from other nations, potentially harming consumers in states like California, which relies partially on energy imports.