Trump says he supports U.S. diesel export ban; Bessent says studying feasibility

President Trump said Tuesday he is encouraging his advisors to support a ban on U.S. diesel exports, as the nationwide average of diesel prices continued to rise, reaching a new record high $6.53/gal.

"I've said 'let's not send out the diesel,'" Trump said when asked about mounting requests from Republican lawmakers to suspend exports. "I've called for it within my people. I've been talking about it."

Trump spoke during a meeting on the sidelines of the United Nations General Assembly with Ukrainian President Zelenskyy, whom he has urged to halt strikes on Russian refineries that have prompted Russia to restrict its own diesel shipments.

Refineries in the Middle East have also come under attack from Iran and its Houthi allies, and exports through the Strait of Hormuz are constrained due to Iranian threats to tankers.

Treasury Secretary Bessent said the U.S. is "examining whether it's feasible in terms of the overall refining capacity and whether a full or partial ban would work."

While ⁠a diesel export ban could, in theory, temporarily lower prices in parts of the U.S., it would tighten supplies further in Europe, which is structurally short on diesel and relies heavily on U.S. exports.

The U.S. has emerged as the supplier of last resort to the world during the Middle East war, with diesel exports surging to a weekly record near 2M bbl/day last month, and a pause would send buyers across Europe and Latin America scrambling for alternatives at a time when few are available, likely adding to already severe inflationary pressures.

U.S. Energy Secretary Wright and Interior Secretary Burgum have argued against an export ban, with Wright emphasizing the U.S. seeks to boost supply rather than curtail foreign sales.

Wright said last week that a ban would lead to a glut of diesel on the U.S. Gulf Coast and cause U.S. refiners to cut production rates, which would lead to lower gasoline production.

Many analysts agree that an export ban could backfire, as domestic refineries likely would process less crude since they will have lost overseas customers, meaning they would make less gasoline and jet fuel as well, leading to higher prices.

Another complication is that some regions of the U.S., such as the Northeast, import diesel; if refiners limit shipments abroad, prices would increase globally, and those regions would wind up paying even more.

The U.S. imposed a 40-year ban on crude exports in 1975 following the Arab oil embargo, when the country relied heavily on foreign crude for its refineries; Congress lifted the ban in 2015, and the oil industry does not want to see another, given that lifting an export ban is more difficult politically than imposing one in an emergency.

The six biggest U.S. refiners - Marathon Petroleum (MPC), Valero Energy (VLO), ExxonMobil (XOM), Phillips 66 (PSX), Chevron (CVX), and PBF Energy (PBF) - earned a combined $24.7B on fuel production in Q2.

On Tuesday, crude oil futures fell for the fifth consecutive session on hopes for diplomatic progress in the Middle East and optimism about oil flows out of the Middle East, as Saudi Arabia reportedly is running tests on its critical East-West oil pipeline, a step toward restoring operations as soon as this week.

President Trump said his special envoys Steve Witkoff and Jared Kushner had a "very productive" meeting with envoys from Iran, even after he threatened to "annihilate" the country during a United Nations speech, although he also said he was open to peace.

Multiple news reports said earlier that Iran had proposed to reopen the Strait of Hormuz if the U.S. lifts its blockade, but Iran's Fars News Agency later denied any such offer.

Front-month Nymex crude (CL1:COM) for October delivery slid 1.2% to $94.59/bbl and front-month Brent crude (CO1:COM) for November delivery dipped 1.1% to $99.25/bbl, the lowest settlement value in two weeks for both benchmarks.

U.S. natural gas futures (NG1:COM) posted their biggest one-day gain since August 10, ending up 4.5% at $2.965/MMBtu.

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