Diesel Supply Tightens as Nations Impose Export Bans Amid Record Prices

Global diesel inventories have reached unprecedented lows, prompting several countries to limit exports. China announced a month-long ban on all fuel shipments, while Russia has maintained a diesel export ban for several months. The United States briefly considered a similar restriction but abandoned the plan after President Donald Trump urged the European Union to release 100 million barrels of crude, diesel and gasoline from storage.

Analysts warned earlier this year that the conflict involving the United States, Israel and Iran could disrupt fuel supplies more than crude oil. Since then, diesel crack spreads have surpassed $100 per barrel, and attacks on Russian refineries have further strained the market. In the United States, diesel prices averaged $6.32 per gallon, while European nations, which rely heavily on imports, face higher costs and limited refining capacity.

The EU’s reduced refinery base—down from levels fifteen years ago—means many member states cannot meet domestic demand without external supplies. A scheduled release of 100 million barrels over the first 20 days of a four-month period is expected to provide limited relief, but market participants have already priced in the difficulty of repeating such releases.

Bulgaria recently lifted a diesel export ban after its sole refinery produced a surplus, but other EU countries may be asked to increase exports if regional demand rises. Meanwhile, Russia’s export ban is likely to be extended as Ukrainian attacks on its refineries continue, and Middle Eastern refined-fuel output remains constrained.

The situation underscores a renewed focus on energy security, with governments prioritizing reliable fuel supplies over decarbonisation targets that had dominated policy discussions since 2015.