US Considers Diesel Export Ban Amid Record Prices in the UK

Donald Trump has indicated that he may request European countries to release some of their diesel reserves as he contemplates a ban on US exports of the fuel. This statement follows a week in which diesel prices reached record highs in the UK, driven by ongoing supply pressures related to the conflict in Iran. The UK relies significantly on diesel imports from the US, and with midterm elections approaching in November, US voters are also facing increased fuel costs, prompting Trump to threaten restrictions on diesel exports. The UK government has been in discussions with the EU regarding these US supply threats, with a meeting scheduled for Friday to address the issue. A ban on exports could lead to an oversupply in the US market, potentially lowering prices for American consumers. However, experts caution that such a ban could exacerbate diesel price pressures in other countries unless they can secure alternative supplies. The US exports between 1.2 and 1.5 million barrels of diesel per day, with over half of the UK's diesel imports sourced from the US. During a recent press interaction, Trump mentioned the possibility of calling on European nations to release their diesel reserves, stating, "We may do that. They have some diesel." US Treasury official Scott Bessent also urged Europe via social media to prepare for an immediate release of diesel supplies, emphasizing that US farmers, truckers, and businesses should not bear the burden of rising prices alone. Diesel prices in the UK have surged to just under 200p per litre, according to the RAC. UK Energy Minister Martin McCluskey participated in discussions with European counterparts regarding the potential export ban. A source familiar with the talks indicated that it would be wise to coordinate a response with other nations, noting that European reserves remain from a previous coordinated release of strategic fuel stocks. The UK government has reassured the public that there is no immediate cause for concern regarding diesel shortages, although further price increases are anticipated. International Energy Agency regulations require member states, including the UK, to maintain oil stocks equivalent to 90 days of net oil imports, while EU regulations mandate reserves covering 61 days of domestic consumption. The EU collectively holds nearly 109 million tons of emergency crude and fuel stocks, with approximately one-third in diesel and related products. A spokesperson for the European Commission mentioned ongoing discussions and high-level contacts with the US administration regarding the diesel situation. Additionally, Chinese refiners have reportedly suspended October exports of certain fuel products to prioritize domestic needs, further impacting the global diesel market. Prices for petrol and diesel worldwide have surged since the onset of the US-Israel conflict in Iran in February, compounded by the closure of the Strait of Hormuz, a crucial transit route for a significant portion of the world's oil and gas. An export ban from Russia, another major diesel supplier, has also contributed to rising prices. Trump has suggested that retaining surplus diesel barrels within the US could lower domestic pump prices, providing immediate relief to consumers ahead of the elections. However, David Fyfe, chief economist at Argus Media, warned that cutting off American supply could lead to a spike in international prices. The RAC reports that diesel prices in the UK have reached an all-time high, with average pump prices now at 199.79p per litre, up from 142.38p. Diesel is more challenging to refine than gasoline and is essential for the haulage and agricultural sectors, making it difficult to reduce demand. The UK heavily depends on imports for diesel, as domestic refineries produce sufficient petrol but not enough diesel to meet national needs. According to the Department for Transport, there were 15.1 million diesel vehicles on UK roads as of June, a decrease from 15.7 million the previous year, with diesel cars also declining from 10.4 million to 9.8 million.