Diesel export ban would hit every major economy, Devere warns
Nigel Green of Devere Group says US diesel export curbs would spread higher fuel costs worldwide, while the oil industry warns they could cut American refining output.
Key points
- Nigel Green, chief executive of Devere Group, issued the warning on Sept. 28 about proposed US diesel export restrictions.
- Brent crude rose above $108 a barrel in early trading on Sept. 28 after President Donald Trump rejected an Iranian proposal on the Strait of Hormuz.
- The American Petroleum Institute said in a Sept. 22 statement that Gulf Coast refineries produce more diesel than the region uses.
- Eurostat's final August figures put eurozone inflation at 3.2% year on year, with energy prices up 14.3%.
- August US producer price data showed diesel fuel prices up 24.1% month on month, with truck freight prices up 2%.
A US diesel export ban would hit every major economy, Devere Group chief executive Nigel Green has warned, as oil prices rose after President Donald Trump rejected an Iranian proposal on the Strait of Hormuz. Green's Sept. 28 assessment said a shortage abroad could spread through freight, farming and industry, and that every major economy on earth is exposed to the potential fallout.
The warning followed Trump's rejection of an Iranian plan that could have reopened the Strait of Hormuz within about seven days under agreed conditions. The waterway is a major route for oil shipments. A Sept. 24 account of Iran's proposal described a proposed easing of US pressure and its blockade, but no reopening agreement was reached.
Oil prices climbed after the rejection, with Brent crude rising above $108 a barrel in early trading on Sept. 28. That added to an energy shock already visible earlier in the month, when Brent crossed $100 during a previous escalation involving Iran. Green's warning concerns a further, conditional shock from US export restrictions rather than a ban already in place.
Green warns on global fallout
Keeping more diesel in the United States could raise domestic supply at first, but the oil industry warns the effect may reverse. In a Sept. 22 statement opposing export restrictions, the American Petroleum Institute said Gulf Coast refineries produce more diesel than the region consumes. If they cannot export the surplus or move it readily to other US markets, they could process less crude oil and produce less gasoline and jet fuel alongside it.
Europe faces a more immediate risk from losing access to US shipments. According to Eurostat's final August figures, eurozone consumer prices rose 3.2% from a year earlier, while energy prices increased 14.3%. A further rise in imported fuel costs could add to that pressure. The European Central Bank raised key interest rates by a quarter-point on Sept. 10 and projected eurozone growth of 0.9% in 2026, saying the outlook remains highly uncertain.
Fuel costs were already feeding into US business prices before the latest policy debate. August producer price index data showed a 24.1% monthly jump in diesel fuel prices, while truck freight prices rose 2%. Those figures help explain why a renewed rise in energy costs could affect goods well beyond the pump, though the eventual price paid by consumers would depend on how much of the increase businesses pass along.
Refiners warn of output cuts
Green also raised the prospect of prolonged inflation changing assumptions about interest rates and investment returns, though that risk does not establish how any particular asset would perform. The policy question remains unresolved: Trump voiced support for curbing exports on Sept. 22, a day before a White House official denied a report that a 90-day ban was being prepared. The decision would come as the Nov. 3 midterm elections approach.