Goldman Sachs predicts short-term diesel price drop and later gasoline rise if U.S. bans diesel exports

Goldman Sachs analysts estimate that a United States ban on diesel fuel exports would initially push diesel prices down by roughly $0.25 per gallon each week, but only until domestic storage capacity is exhausted. Once storage fills, the bank expects gasoline prices to climb, adding about $0.30 per gallon each week as gasoline, diesel and jet fuel are produced together.

"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 analysts wrote.

The analysts also project that European diesel markets would feel the impact, with U.S. diesel prices potentially falling by $3 per barrel, or about 2% of current levels. An emergency release of inventories could offset roughly half of that decline.

"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," the note added.

Goldman Sachs cautioned that the temporary relief for diesel could be short-lived, followed by higher gasoline costs and a rebound in diesel prices after the ban ends.