A potential U.S. ban on diesel exports would first push domestic prices lower, then trigger a sharp surge in gasoline costs, according to Goldman Sachs Group Inc. (GS).
Goldman Sachs co-head of global commodities research outlined the scenario in a research note modeling a hypothetical export restriction on the fuel.
President Donald Trump has backed the idea of banning U.S. diesel exports, putting fresh scrutiny on a country that operates as the world’s largest exporter of the fuel.
Advisers are debating options including outright bans or quotas, and Treasury Secretary Scott Bessent is currently reviewing the proposal.
U.S. diesel net exports have risen to around 1.6 million barrels per day in recent months, while the national average retail diesel price has climbed to $6.50 per gallon.
Goldman described the export ban as “a very plausible scenario, though not our base case,” modeling a hypothetical restriction beginning in early October and lasting through at least December.
In the early weeks of a ban, Goldman estimates that each week of restricted exports could put roughly $0.25 per gallon of downward pressure on average U.S. retail diesel prices as domestic inventories build.
European wholesale diesel prices would rise by about $3 a barrel, or roughly 2%, initially, though releases of strategic European diesel reserves could offset about half of that increase.
Goldman calculated that U.S. diesel storage tanks could theoretically fill within 9 to 10 weeks if outflows dropped by 1.6 million barrels per day, though refinery output cuts and shifting demand could alter that timeline.
“The longer a diesel export ban lasts, the more disruptive it would likely be by putting upward pressure on gasoline prices because diesel, gasoline, and jet fuel are largely produced together,” Goldman Sachs commodity analysts said.
Once storage capacity tops out, Goldman warns that each additional week of a ban would instead add roughly $0.30 per gallon to retail gasoline prices nationwide.
The bank said gasoline prices could begin facing upward pressure even before storage reaches its theoretical limit, as refiners pull back on output in response to falling diesel margins.
“All things equal, lower diesel prices would incentivize refiners to reduce their production,” Goldman’s Daan Struyven said in a Bloomberg Television interview.
“Once a diesel ban is lifted, US diesel prices would likely reconnect with prices elsewhere, including Europe, putting upward pressure on US diesel prices and downward pressure on prices abroad,” the analysts said.
Goldman also cautioned that the hit to U.S. refinery output during any ban period would leave global refined product prices permanently above where they would have landed without any restriction.
The bank is using the analysis to reiterate a standing trade recommendation of going long European gasoline, citing thin cushioning in Europe’s gasoline market as justification for the position.
