Potential US diesel export restrictions: A US diesel export ban could initially ease domestic diesel prices but ultimately tighten gasoline and overseas diesel markets

Overview

Goldman Sachs assesses the cross-market consequences of possible US diesel export restrictions, which it considers plausible but not its base case. Its stylized scenario shows an initial domestic diesel-price benefit giving way to refinery disruption, higher US gasoline prices, tighter overseas diesel markets, and a continued case for European gasoline as a geopolitical hedge.

Core views

The report examines a hypothetical full US diesel export ban from early October 2026 through at least December 2026, reflecting a reportedly considered 90-day restriction. The backdrop is a US national average retail diesel price of $6.5/gallon and a rise in US diesel net exports from 1.1mb/d in 2025 to around 1.6mb/d in recent months, as high global diesel refining margins encouraged additional output and exports. Goldman Sachs notes that quotas or licensing restrictions are also plausible, while alternatives to ease domestic prices could include temporarily waiving the $0.24/gallon federal diesel tax or exempting road diesel from the federal biofuel-blending program, suspending roughly $0.30/gallon of RIN costs. Initially, preventing exports would build US diesel inventories and put moderate downward pressure on domestic diesel prices. The model assumes the 1.6mb/d decline in net exports translates initially into a 1.6mb/d inventory build, moderated only if lower prices prompt stronger diesel demand. Applying the historical relationship between diesel-stock changes and wholesale and retail prices, Goldman Sachs estimates that each week of a ban while storage remains available would lower average US retail diesel prices by $0.25/gallon, just under 4% of the $6.5/gallon starting level. The report expects US and ex-US diesel prices to decouple during the restriction. Reallocating Gulf Coast supply to other US regions may take weeks because refiners have planned exports and transportation capacity is constrained; the expected full domestic switch also assumes an extension of the Jones Act waiver for foreign tankers. The domestic benefit becomes increasingly disruptive as inventories approach tank tops. Under the stylized 1.6mb/d inventory-build pace, national storage fills in 9-10 weeks, although available storage is not all near Gulf Coast refineries and actual refinery cuts and demand responses would likely occur before full storage is reached. Falling diesel prices would compress refining margins, potentially make diesel margins negative, and incentivize refiners to lower utilization. Because diesel, gasoline, and jet fuel are substantially co-produced and yield-switching capacity is limited, reduced refinery runs would also constrain gasoline and jet-fuel output. Using a baseline diesel share of refinery output of 28%, diesel demand of 3.9mb/d, and refinery run cuts of 2.1mb/d, the report estimates a 1.25mb/d reduction in gasoline output and a corresponding 1.25mb/d draw on gasoline stocks. Historical stock-price pass-through then implies that each week after diesel storage is full could add $0.30/gallon to US retail gasoline prices. This impact would be smaller if refiners could shift more production from diesel to gasoline or if diesel demand rose more than assumed, and Goldman Sachs expects some gasoline-price pressure to arise before the stylized 9-10 week storage threshold. Outside the US, the loss of US diesel supplies would tighten importing regions. Europe and Latin America, including Brazil and Mexico, are key destinations for US diesel exports, while tighter regional balances could pull remaining barrels from suppliers such as India and spread the shock into Asia. Goldman Sachs estimates that each week of a ban would lift European ARA wholesale diesel prices by $3/bbl, just under 2%. The calculation assumes the 1.6mb/d loss of US net exports reduces OECD ex-US net imports by nearly 0.7mb/d, based on the region's roughly 40% share of global ex-US net imports, and uses the historical relationship between OECD ex-US commercial diesel stocks and European diesel prices. European strategic diesel releases could offset about half of the increase: OECD Europe held 190mb of strategic diesel reserves at end-June, equivalent to nearly 500 days of US diesel imports. The SPR-release scenario assumes 0.5mb/d of releases, with two-thirds ultimately reaching OECD ex-US commercial stocks. Once restrictions are lifted, the report expects US diesel prices to reconnect upward with Europe, Latin America, and Asia, while overseas diesel prices decline. Nevertheless, global refined-product prices would likely remain above a no-ban counterfactual because temporary refinery-output reductions leave cumulative global product inventories lower. Goldman Sachs reiterates long 2027 European gasoline positions, such as EBOB Jun27, to hedge geopolitical risk. It argues that gasoline markets are already tightening as high diesel prices have led refiners to favor diesel output over gasoline. Higher ex-US diesel prices under export restrictions could intensify this shift. Potential future inclusion of gasoline in US product-export restrictions would tighten ex-US gasoline markets further, while diesel-storage congestion could ultimately reduce US gasoline output and tighten global gasoline markets after restrictions end. Europe has gasoline SPR reserves about four times smaller than its diesel reserves, limiting policymakers' ability to offset additional gasoline tightness through reserve releases.

Analysis framework

Goldman Sachs builds a stylized export-ban scenario and traces it through product balances: lost diesel exports first raise US inventories, then constrain refinery runs as storage fills, reduce co-produced gasoline supply, and affect domestic prices. It separately estimates the overseas impact by translating lost US exports into lower OECD ex-US diesel stocks. Price effects are derived from historical relationships between product inventory changes and wholesale and retail product prices, with sensitivity analysis around refinery diesel yields and diesel demand.

Methodology notes

• Industry AnalysisSupply-demand framework

  Product-balance and inventory-based supply-demand modeling

  The report converts lost exports into changes in diesel inventories and imports, then uses those tighter or looser balances to estimate price effects.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Refinery co-production and output transmission

  Lower diesel economics and storage constraints lead refiners to cut runs, which also reduces gasoline and jet-fuel output because product yields cannot be fully switched.

• Other

  Historical inventory-to-price pass-through

  Goldman Sachs applies historical relationships between changes in product stocks and product prices to translate modeled inventory changes into diesel and gasoline price pressure.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• European gasoline, including EBOB Jun27

  Goldman Sachs reiterates long 2027 positions as a hedge against geopolitical risk and gasoline-market tightening.

  Strengths

  Rapidly tightening gasoline markets, possible further refinery switching toward diesel, and limited European gasoline SPR capacity.

  Comparison

  Europe's gasoline SPR reserves are about four times smaller than its diesel reserves.

  Risks

  Gasoline-price pressure from diesel export restrictions would be smaller if refinery yield switching or stronger diesel demand reduced refinery run cuts.

Key data

• US national average retail diesel price$6.5/gallonStarting domestic diesel-price level cited in the report.
• US diesel net exportsAround 1.6mb/dUp from 1.1mb/d in 2025.
• Initial US diesel-price effect-$0.25/gallon per weekEstimated while storage remains available; just under 4% of $6.5/gallon.
• Time to national diesel storage capacity9-10 weeksStylized estimate assuming inventories build at 1.6mb/d.
• US gasoline-price effect after storage is full+$0.30/gallon per weekEstimated upward pressure from refinery-run cuts and lower gasoline stocks.
• European wholesale diesel-price effect+$3/bbl per weekJust under 2%; European SPR releases might offset about half.
• OECD Europe strategic diesel reserves190mbEnd-June level, equivalent to nearly 500 days of US diesel imports.

Impact & implications

The report portrays export restrictions as a temporary regional price divergence rather than a simple domestic diesel-price solution. Initial US diesel relief would be offset over time by storage congestion, weaker refinery economics, tighter gasoline supply, and higher overseas diesel prices; after a ban ends, global product prices could remain elevated because refinery output and inventories were reduced during the restriction.

Risks

• The duration and exact form of any US diesel export restriction, including bans, quotas, or licenses, remain uncertain.
• The modeled gasoline-price increase would be smaller if refiners can shift more output from diesel to gasoline or if diesel demand rises more than assumed.
• The full reallocation of Gulf Coast diesel to domestic regions depends on a Jones Act waiver and may be delayed by planned exports and transportation constraints.

What to watch

• Whether the US administration adopts a diesel export ban, quota, licensing regime, tax waiver, or biofuel-blending exemption.
• US diesel inventory accumulation and available storage capacity, particularly near Gulf Coast refineries.
• US refinery utilization, diesel margins, gasoline output, and retail gasoline prices as inventories rise.
• European diesel SPR releases and their ability to cushion ARA gasoil prices.
• Any extension of US product-export restrictions to gasoline.