Goldman Sachs said on Saturday that a US diesel export ban would initially put moderate downward pressure on diesel prices, and that restrictions on exports, including quotas, were a plausible outcome.
Here are a few details:
* US President Donald Trump on Tuesday backed the idea of banning US diesel exports, with the US being the world’s largest exporter of the fuel.
* However, US Energy Secretary Chris Wright said on Wednesday that such a ban would not work and could instead raise gasoline and jet fuel prices.
* The brokerage estimated in a note that, as long as storage capacity remained available, each week of a diesel export ban would reduce average US retail diesel prices by about 25 cents per gallon, or just under 4% from the current level of $6.50 a gallon.
* “The longer a diesel export ban lasts, the more disruptive it would likely be by putting upward pressure on gasoline prices because diesel, gasoline, and jet fuel are largely produced together,” the bank said in the note.
* Goldman Sachs estimates that once diesel storage is full, each week of a US diesel export ban would likely be associated with $0.3 per gallon of upward pressure on US retail gasoline prices.
* Goldman Sachs said it estimates that each week of a US diesel export ban would raise European wholesale diesel prices by $3 a barrel, or just under 2%, although European SPR diesel releases might offset about half of the price increase.
* “Once a diesel ban is lifted, US diesel prices would likely reconnect with prices elsewhere, including Europe, putting upward pressure on US diesel prices and downward pressure on prices abroad,” it added.
(Reporting by Sukanya Mitra in Bengaluru; Editing by Sherry Jacob-Phillips)