Goldman Sachs analysts estimated in a report on Saturday (September 26) that a U.S. ban on diesel exports would initially depress U.S. diesel prices by about 25 cents per gallon per week, or about 4%, from the current level of about $6.50 per gallon; while pushing European wholesale prices up by about $3 per barrel, or about 2%. Release from Europe's strategic diesel reserves could offset about half of the continent's initial increase. The U.S., the world's largest diesel exporter, is considering export restrictions to cope with soaring domestic prices as the conflict with Iran has dampened Middle Eastern supplies. Goldman Sachs described the restrictions as a "very likely" scenario, but not its baseline scenario.

US diesel prices initially fell by about 4%, while European wholesale prices rose by about 2%.

Goldman Sachs analysts calculated in a report that if the US were to completely ban diesel exports, the domestic market would be the first to feel the pressure from the supply repatriation. As the world's largest diesel exporter, the US has recently increased its net exports from approximately 1.1 million barrels per day in 2025 to around 1.6 million barrels per day. Once export channels are closed, diesel that was originally destined for overseas will remain domestically, leading to a rapid accumulation of inventory. Before storage capacity reaches its limit, each week of the ban is expected to put downward pressure on the average US retail diesel price by about 25 cents per gallon, equivalent to a decrease of about 4% from the current level of about $6.50 per gallon. The latest weekly data from the US Energy Information Administration shows that the national average price of highway diesel reached $6.529 per gallon in the week ending September 21, close to historical highs, thus this decline has a significant buffering effect. Meanwhile, Europe, as a major recipient of US diesel, could see wholesale prices rise by about $3 per barrel per week, equivalent to about 2%. Goldman Sachs considers the release of European strategic diesel reserves a key buffer tool, expecting it to offset about half of the initial increase in prices on the continent, thereby mitigating the short-term impact. Platts, a subsidiary of S&P Global Energy, assessed on September 16 that the price of ultra-low sulfur diesel exported from the U.S. Gulf Coast reached a record high of approximately $4.78 per gallon, further confirming the current level of market tension. Overall, the initial phase of the ban showed a clear regional divergence, with prices decreasing in the U.S. and increasing in Europe. However, the ability of Europe to release its reserves will determine whether the actual price increase can be effectively offset.

The ban could push up U.S. gasoline prices by about 30 cents per gallon.

Goldman Sachs described the export restrictions as a "very likely" scenario, but explicitly stated that this was not its baseline forecast. Its core concern lies in the ripple effects on other refined petroleum products. Diesel, gasoline, and jet fuel are highly intertwined in refinery processes, and production adjustments often occur simultaneously. As US diesel inventories approach storage limits due to export disruptions, a continued decline in diesel prices will directly squeeze refining margins. This profit compression may prompt refineries to proactively reduce crude oil processing volumes, thereby consequently lowering gasoline and jet fuel output. Goldman Sachs estimates that once diesel storage reaches full capacity, each additional week of the ban could exert upward pressure on US retail gasoline prices by approximately 30 cents per gallon. More importantly, gasoline prices may even begin to be pressured before storage actually reaches its theoretical limit, as refineries will adjust their operating loads in advance based on profit signals. This transmission chain clearly demonstrates that the effect of the diesel export ban is far more than simply lowering diesel prices; it gradually transmits to the entire refined petroleum product system through refinery profits, production decisions, and inventory constraints. U.S. refinery utilization rates are already high, leaving limited room for further production cuts, but this is enough to create supply shortages, ultimately pushing up gasoline costs and putting new pressure on consumers and the transportation industry.

Even after the ban is lifted, global refined oil prices may still be higher than they would have been without the ban.

Analysts further extrapolated the market path after the ban was lifted. Once export restrictions are lifted, US diesel will re-enter the international market, and prices are expected to realign with those in Europe and other regions: domestic prices will rise due to supply outflows, while overseas prices will fall due to increased supply. On the surface, this seems to be merely a regional price rebalancing. However, Goldman Sachs points out that even after this rebalancing process is completed, the overall level of global refined product prices may still be higher than the baseline scenario of "no ban and no decline in US refinery output." This is because the output cut by refineries due to profit pressure during the ban may not be able to quickly recover to its original level after the ban is lifted; some capacity adjustments have a lag, and inventory rebuilding also takes time. Therefore, the net effect of the ban is not a simple transfer of price space, but may drive a structural upward shift in the global refined product price center. Against the backdrop of continued pressure on Middle Eastern supply, any fluctuation in US export policy will amplify market concerns about supply security, thereby supporting crack spreads and crude oil prices. This assessment reminds market participants that the long-term impact of short-term policy intervention may extend beyond regional redistribution and evolve into a permanent disturbance to the global supply and demand balance.

Trading Recommendation: Buy European gasoline

Regarding positioning, Goldman Sachs recommends buying European gasoline. The bank stated that the gasoline market is tightening rapidly, and a potential U.S. export ban on gasoline would further tighten supplies outside the U.S. Analysts point out that Europe's strategic gasoline reserves are four times smaller than its diesel reserves, leaving less room for maneuver. The logic behind this recommendation is that a diesel export ban could prompt refineries to reduce output, thereby tightening gasoline supplies, while Europe's weak gasoline reserves make it more vulnerable to supply shocks. With the conflict with Iran suppressing Middle Eastern supplies, any headline news regarding U.S. export decisions could drive up refined product crack spreads and crude oil prices.

Editor's Summary

Discussions surrounding US diesel export restrictions stem from the dual backdrop of high domestic prices and supply disruptions in the Middle East. Short-term price transmission indicates a close correlation between diesel and gasoline, with refinery output adjustments potentially becoming a key variable. During the global market's supply-demand rebalancing process, the price center may face a structural upward shift risk, and the varying buffering capacity of Europe as a major importing region will also affect the degree of price differentiation between regions. Whether the policy is implemented, its duration, and the accompanying measures will directly determine the actual intensity of the market impact.

Frequently Asked Questions

Q: Why is the US considering banning or restricting diesel exports? A: Primarily because domestic diesel retail prices have risen to a high of approximately $6.50 per gallon, increasing cost pressures on industries such as transportation and agriculture. Middle Eastern supplies are constrained by conflicts related to Iran. As the world's largest diesel exporter, restricting exports can increase domestic supply and alleviate price increases. Q: How will the ban affect US diesel and gasoline prices differently? A: Initially, diesel prices may decrease by about 25 cents per gallon per week (approximately 4%) due to increased supply and rising inventories. However, pressure on refinery profits may lead to production cuts. The bundled production of diesel and gasoline will tighten gasoline supply, and once storage is full, gasoline prices may rise by about 30 cents per gallon per week. Q: What impact will this have on the European market? A: Reduced US exports will push up European wholesale diesel prices by an estimated $3 per barrel per week (approximately 2%). The release of European strategic diesel reserves can offset about half of the initial increase, but gasoline reserves are smaller (about a quarter the size of diesel), providing a weaker buffer, and the risk of a tighter gasoline market is higher. Q: Why does Goldman Sachs recommend buying European gasoline? A: The gasoline market was already tight, and the diesel ban could prompt refineries to cut production, thus affecting gasoline supply. If the US simultaneously restricts gasoline exports, overseas supply will become even tighter. Europe's strategic gasoline reserves are weak, making it more susceptible to price increases and creating trading opportunities. Q: How will global refined oil prices evolve after the ban is lifted? A: US prices may align with overseas prices and rebound, while overseas prices may fall. However, because the ban may have triggered refinery production cuts, the global refined oil price level may still be higher than in a scenario without the ban and production cuts, showing an overall upward shift rather than a simple redistribution.