Morgan Stanley warned that a US ban on diesel exports could push gasoline prices higher. The bank expects domestic storage to fill within weeks, forcing refiners to scale back output.
Goldman Sachs issued a similar warning on Wednesday, while President Donald Trump weighs export curbs to tame record diesel prices.
Record Pump Prices Put a Diesel Export Ban on the Table
AAA averages cited by Bloomberg show diesel up 74% since February 27, the eve of the war in Iran. It hit a record $6.52 a gallon on Tuesday.
Gasoline has also climbed, with AAA reporting a national average of about $4.47 on September 24. That compares with $2.98 on February 26, a gain of roughly 50% since the war began.
With prices surging, the Trump administration is studying whether blocking exports of the fuel could provide relief, Treasury Secretary Scott Bessent said on Tuesday. President Donald Trump said that he backs 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.
Those calls have split the administration. Interior Secretary Doug Burgum and Energy Secretary Chris Wright have argued against a ban. Beyond the war in Iran, Ukrainian strikes on Russian refineries forced Moscow to impose its own diesel export ban, CNBC reported.
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Why Refiners Would Pull Back if Diesel Stays Home
But would a ban actually help prices? Morgan Stanley analysts, including Martijn Rats, laid 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 estimates 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 fall by roughly 650,000 barrels a day.
The analysts expect US diesel prices to drop under a ban, while overseas costs would rise. They identified Europe as the region with the greatest exposure.
A ban is not the bank’s base case. Even so, the analysts expect oil prices to stay volatile while the debate continues.
Goldman Sachs commodities research co-head Daan Struyven reached a similar view on Bloomberg Television. He said cheaper diesel would give refiners a reason to produce 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 policy design would matter, including whether to use a ban or a quota, and whether to provide incentives to keep refiners running.
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