Goldman Sachs predicts that diesel prices will see an initial decline under U.S. export restrictions.

Reuters, September 28 - Goldman Sachs said on Saturday that if the US bans diesel exports, it will initially put moderate downward pressure on diesel prices, and that implementing export restrictions, including quotas, is a possible outcome.

Details are as follows:

• US President Donald Trump on Tuesday expressed support for a proposal to ban US diesel exports (link), while the US is currently the world’s largest diesel exporter.

• However, US Energy Secretary Chris Wright (link) said on Wednesday that such a ban would not be effective and could instead drive up gasoline and jet fuel prices.

• According to a report by the brokerage, as long as storage capacity is sufficient, each week the diesel export ban is in place would lower the average US diesel retail price by about 25 cents per gallon, a drop of less than 4% from the current level of $6.50 per gallon.

• “The longer the diesel export ban lasts, the greater the upward pressure on gasoline prices, potentially leading to larger market disruptions, since diesel, gasoline, and jet kerosene are largely co-produced,” the bank said in its report.

• Goldman Sachs estimates that once diesel storage reaches capacity, each week a diesel export ban is in place could push US retail gasoline prices up by $0.3 per gallon.

• Goldman Sachs said that, according to its estimates, each week the US diesel export ban is in effect will cause European wholesale diesel prices to rise by $3 per barrel, a gain of just under 2%, although diesel released from Europe’s Strategic Petroleum Reserve (SPR) could offset about half of this increase.

• “Once the diesel ban is lifted, US diesel prices may realign with those in other regions, including Europe, creating upward pressure on US diesel prices and downward pressure on overseas prices,” the bank added.

(To facilitate non-English speakers, Reuters has automatically translated its reports into several other languages. As automated translation may contain errors or lack needed context, Reuters does not guarantee the accuracy of automated translation and provides it solely for reader convenience. Reuters accepts no responsibility for any damage or loss caused by the use of automated translation functions.)