US diesel futures fall 4% after export ban report denied

Washington, United States. US ultra-low-sulfur diesel futures fell 4% on Wednesday after Politico reported that the White House was preparing a 90-day ban on diesel exports. The Trump administration denied the report.

Prices and supply

The October futures contract was last trading at $4.7437 a gallon, down 4%, after falling more than 6% earlier. Average US diesel prices were near record highs at $6.52 a gallon, according to AAA, straining farming, transportation and other industries that rely on the fuel.

Wars in Iran and Ukraine have sharply reduced exports from major producers including Russia, Saudi Arabia and the United Arab Emirates. US diesel inventories have fallen below 97 million barrels, about 13% below the seasonal average for the past five years.

Administration response

A White House official said the report that the US was considering a flat, temporary export ban was incorrect. President Donald Trump said on Tuesday that he backed a ban, while Republican candidates in some of November’s tightest election races called for the measure to curb record fuel prices.

US Energy Secretary Chris Wright said on Wednesday that an export ban would not work and could raise gasoline and jet fuel prices. He said the administration was working with refiners to increase US diesel supplies through a “simpler, voluntary, cooperative fashion, without using blunt instruments that would reduce refining throughput.”

Wright said any plan would be voluntary. He gave no details and said no decisions had been made.

Potential market effects

Analysts have warned that an export ban would raise diesel prices globally while lowering them in the United States and hurting US refining margins. European diesel refining margins rose to a record high on Wednesday after Trump’s comments.