Morgan Stanley and Goldman Sachs warn a US diesel export ban could push gasoline prices up as refiners cut output, while Trump weighs the curb.
Morgan Stanley has cautioned that a ban on US diesel exports could end up making gasoline more expensive. The bank expects domestic storage to fill within weeks, leaving refiners with little choice but to cut output.
Goldman Sachs issued a parallel warning on Wednesday as President Donald Trump weighs export curbs intended to tame record diesel prices.
AAA averages cited by Bloomberg show diesel up 74% since February 27, the eve of the war in Iran. On Tuesday it reached a record $6.52 a gallon.
Gasoline has risen too, with AAA reporting a national average near $4.47 on September 24. That compares with $2.98 on February 26, an increase of roughly 50% since the war started.
With prices surging, the Trump administration is looking at whether blocking exports of the fuel could bring some relief, Treasury Secretary Scott Bessent said Tuesday. President Donald Trump has said he supports an export ban.
"We're examining whether it's feasible in terms of the overall refining capacity and whether a full or partial ban would work," Bessent said.
The proposals have split the administration, with Interior Secretary Doug Burgum and Energy Secretary Chris Wright arguing against a ban. Beyond the war in Iran, Ukrainian strikes on Russian refineries forced Moscow to impose its own diesel export ban, CNBC reported.
Would a ban truly help prices? Morgan Stanley analysts, including Martijn Rats, spelled out why it might not in a September 23 note.
"A diesel export ban could have the counterintuitive effect of an increase in gasoline prices if US refiners cut runs," the analysts said.
The bank reckons a ban would force refiners to cut runs by about 2 million barrels a day. Even if processors shifted yields toward gasoline, output of that fuel would drop by roughly 650,000 barrels a day.
The analysts expect US diesel prices to fall under a ban, while costs overseas would climb. Europe, in their view, faces the greatest exposure.
A ban is not the bank's base case. Even so, the analysts expect oil prices to remain volatile while the debate continues.
Goldman Sachs commodities research co-head Daan Struyven came to a similar conclusion on Bloomberg Television. Cheaper diesel, he said, would give refiners a reason to refine less.
"And because gasoline and diesel are usually produced together as a bundle with some flexibility, it would likely reduce the availability of gasoline," he said.
Struyven said the design of the policy would matter, including whether to opt for a ban or a quota, and whether incentives would be offered to keep refiners running.
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