US President Donald Trump is considering a ban on diesel exports as fuel prices in the country hit record levels. 

Trump said he is looking “very seriously” at restricting exports, as the administration seeks ways to increase domestic diesel supplies and ease pressure on consumers and businesses.

The proposal comes at a time when global diesel markets are already facing tight supplies. Conflicts in the Middle East and Ukraine have disrupted energy flows from major producers, while the closure and disruption around the Strait of Hormuz have further complicated fuel shipments. 

Global diesel prices have risen sharply, with US retail diesel prices reaching around $6.50 a gallon. The US has become an important supplier to the global diesel market as exports from Russia and parts of the Middle East have been disrupted. 

US diesel exports reached record levels of nearly 2 million barrels per day in August, according to reports. Latin America, Europe and Africa are among the major destinations for American diesel.

A US export ban could therefore have a significant impact beyond the American market. With fewer US barrels available internationally, buyers in Europe and Latin America could have to compete for supplies from other producers. This could push international diesel prices higher and increase fuel costs for transport, agriculture and industries.

The proposal could also create challenges within the US. Energy Secretary Chris Wright has previously said a blanket export ban would not be effective and could reduce refinery operations. Since refineries produce diesel, petrol and jet fuel from the same crude feedstock, lower refinery utilisation could eventually tighten supplies of other fuels as well.

US energy and manufacturing groups have also urged the administration to reject restrictions, arguing that export controls could reduce refinery output and create wider fuel shortages. More than 30 industry groups recently called for alternative measures to address high domestic prices.

For India, the development could have a different impact. India is a net diesel exporter, and refiners such as Reliance Industries and Nayara Energy could benefit from stronger international diesel prices if US exports decline. 

However, higher crude and fuel prices could also increase India’s overall energy import bill and add pressure to inflation.

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