The US may restrict diesel exports causing market concerns! The difference in diesel prices between the US and Europe narrowed to the lowest level since the end of April
The Zhitong Finance App notes that outside of the US, diesel prices have risen sharply compared to US diesel, and the prospect that the Trump administration might introduce an export ban previously disturbed the market.
On Wednesday, the New York Mercantile Exchange heating oil — a product almost identical to diesel — closed down to its lowest level since the end of April. The fluctuation on the day was the biggest since Russia invaded Ukraine in 2022, triggering shortage fears. There was a partial rebound in this trend on Thursday.
There is still great uncertainty about whether the US will introduce an export ban, but Energy Secretary Chris Wright has warned oil industry leaders to prepare for possible sales restrictions as domestic retail prices soar. Trump said he has encouraged government officials to consider restrictions. The EU has expressed concern about the prospects of a possible ban.
Any restrictions would put further pressure on an already greatly disrupted global market. Reduced supply due to the war in Iran, attacks on Saudi refineries by the Houthis in Yemen, and attacks on Russian refineries by Ukrainian drones have all significantly reduced the amount of fuel available.
European diesel prices soar
Rapidly rising diesel prices are also becoming a hot topic for central bank governors around the world as they try to curb inflation.
David Bird, CEO of Dangote Petroleum Refining and Petrochemicals, said in an interview in London, “The world's largest free economy is actually discussing a ban on exports. This is simply unprecedented.” “Refining profit margins are high, but we hope this won't last too long. It doesn't benefit anyone.”
The European Commission said on Thursday that despite high prices, it is currently not seeing a shortage of diesel in the region. The committee also said that an oil monitoring team within the EU will meet next week to assess the situation.
Earlier this week, French President Emmanuel Macron called on the European Union to relax some fuel quality rules to increase the available supply in the market.
The International Energy Agency (IEA) said this month that Europe still has large emergency fuel reserves that can be released if necessary — another measure it may take to suppress prices. Earlier this year, about half of the refined oil products released by IEA member states was diesel.
If the US does implement an export ban, the focus will turn to where else the rest of the world can find supplies. Traders said that shipments from the Persian Gulf have also increased in recent weeks, but the speed of additional supply will depend on how the refinery resumes production.
According to Kpler's data, China's export volume of intermediate distillate oil (a type of fuel including diesel and aviation fuel) last month was the highest in a year. The world's largest importer of crude oil has considerable export capacity, but these amounts may be limited by government quotas.
Thirty US industry groups, including the American Fuel and Petrochemical Manufacturers Association, wrote in a letter to the White House on Wednesday that “in addition to the price impact, export restrictions will be a gift to our competitors.” “If we retreat, other countries will make up for it, our influence will shrink, and our rivals will take advantage of the opportunity to expand their territory.”