The European Union has warned the United States against banning diesel exports, saying such a move would damage both sides of the Atlantic. The European Commission said it was watching developments with "concern" after reports emerged that President Donald Trump is considering a 90-day ban on US diesel exports ahead of November's midterm elections.
Trump has spoken openly about the idea. "I've said let's not send out the diesel. We make a lot of diesel … I've called for it. I've called for it within my people," he said.
US diesel prices have hit a record average of $6.52 a gallon, and the administration is under pressure to ease costs for American households before voters go to the polls.
EU spokesperson Olof Gill said on Thursday that "any disruption would risk negatively impacting both sides" and that the bloc expected "close partners to consult each other before taking measures that affect shared markets."
US Energy Secretary Chris Wright has also expressed reservations, describing an export ban as a "blunt tool" that could harm domestic fuel supplies over the long term. The American oil industry has pushed back sharply against the proposal, warning it would cause supply problems and higher prices both at home and abroad.
For Europe, the consequences could be severe. US diesel exports have accounted for roughly a third of the continent's imports this year, as supplies from war-damaged refineries in the Middle East and Russia have fallen sharply. By August, the US was supplying approximately half of Europe's diesel imports.
"A US export ban would be devastating for diesel supply in Europe, which would struggle to replace supply," said Josh Michalowski, head of European diesel pricing at commodities data provider Argus Media.
Pump prices have already climbed to record highs in Germany and the Netherlands. In the UK, the average cost of diesel stood at 197.75 pence a litre on Thursday, up from 142.38 pence before the start of the Iran war, according to the RAC. Some UK fuel stations have already passed the £2-a-litre mark, with one BP station in Kinross, Perthshire, Scotland, reaching £2.17 a litre.
Analysts warn that motorists in the UK could be only days away from fresh all-time highs, raising concerns about the economic impact on hard-pressed households.
Europe is not entirely without resources. The continent produces around 70% of the diesel it consumes from domestic refineries and holds fuel reserves. However, experts fear that competing for cargoes on the global market would drive prices significantly higher.
Benedict George, head of European products at Argus, said markets had remained relatively calm since the reports emerged, as traders continued to assess how far the White House might go. "If this prospect became even relatively serious [in the White House], it would be very serious for European markets. There would be some degree of panic given how reliant buyers have become on US cargoes," he said.
"There's enough European diesel production to ensure that we wouldn't run out, but losing US cargoes would mean buyers would have to compete with buyers in Asia for the few available cargoes from the Middle East and India, in what is already a very competitive global market," George added.
The UK faces particular exposure. The country has only four operating oil refineries following the closures of Grangemouth and Lindsey last year, both of which had produced diesel for the domestic market.
Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK, warned that losing almost 90,000 barrels a day of US distillate — equivalent to around 18% of the country's total consumption — would leave the UK significantly more vulnerable to global diesel price swings.
"A US ban on diesel exports would pose a significant challenge for the UK, given the country's growing reliance on American refined fuel," Pugh said. He added that while immediate fuel shortages were unlikely, a prolonged ban would make them a "real possibility."
The price of diesel has risen faster than global oil prices due to severe disruption at refineries in the Gulf and Russia. The so-called crack spread — the price difference between crude oil and refined diesel — reached a record high earlier this month and could climb further.
