Export ban talk sinks diesel, boosts gasoline as White House eyes options

Even if a diesel export ban is not enacted, the mere discussion of it had an immediate effect on commodity markets. Ultra low sulfur diesel (ULSD) prices on the CME exchange dropped 16.57 cents per gallon, a 3.35% decrease to $4.7764/gallon, marking the lowest settlement since September 8th. The decline came as the futures price of a vital gasoline intermediate product, RBOB, surged by 9.95 cents per gallon to $3.587/gallon, reaching its highest settlement since July 23rd.

The reaction to this potential diesel export ban was driven by critics of the policy, with a Wall Street Journal editorial expressing skepticism as "Republicans are Running on Empty." The market response occurred a day after President Trump indicated support for the ban, aligning with several Republican lawmakers.

U.S. exports of ULSD in the week leading up to September 18th were 1.33 million barrels per day (b/d), a considerably lower figure compared to recent weeks, which have averaged between 1.6 to 1.7 million b/d. Meanwhile, U.S. consumption of non-jet fuel distillates, which make up about 90% of ULSD, has been running between 3.6 to 3.8 million b/d.

According to a report by S&P Global Energy, a diesel export ban would lead to a surplus of diesel in the U.S. This surplus would pressure imports, shifting yield away from diesel. Refiners would be compelled to reduce crude runs by approximately 2 million b/d to eliminate the resulting diesel surplus. As a result, the U.S. could become a net importer of gasoline in the fourth quarter of 2026, potentially increasing prices for gasoline and jet fuel in import-dependent regions on the East and West Coasts.