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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


Fake News. Real Havoc. The Energy Report 09/24/2026

Talk of a diesel export ban is already causing havoc — and the White House calling it fake news has not put the fire out. I think we saw a glimpse of what an export ban of diesel might do and let’s face it. It was not pretty and caused pandemonium is a slew of market both foreign and domestic signaling chaos and instability would be the likely outcome.

Politico dropped a story Wednesday that the administration was preparing a 90-day ban on U.S. diesel exports to knock pump prices down before the midterms. The reaction was instant. U.S. ultra-low-sulfur diesel futures cratered — down more than 6% at the worst, settling roughly 4% lower. Europe went the other way. Diesel cracks over there exploded as traders priced the loss of American barrels that have been a critical Atlantic Basin safety valve. Oil caught a bid as desks unwound fat diesel crack positions and then had to cover crude when the White House slapped the story as “another fake news story from Politico.” We also of course saw the crash on the diesel crack spread which could lead to a situation where refiners start to cut back production this could cause real problems in a global market where the US is a big part of the seaborne supply if you take that off the market it raises a real possibility of a recession and I think the trump administration thinking that a short term ban to get prices down through the midterms might be a good solution but the markets are suggesting otherwise.

Of course some traders suggest that maybe that the fake news story was a test to see how markets would react hey good morning good morning Traders know the difference between a denial and a closed door. President Trump himself said Tuesday, “I’ve said let’s not send out the diesel.” Treasury Secretary Bessent said they were examining whether a full or partial ban would work. Energy Secretary Chris Wright pushed back hard — a flat ban “definitely doesn’t work” and would squeeze gasoline and jet. Wright is talking voluntary measures to get more diesel into the U.S. without choking product flows. That is the grown-up position. The political camp, according to Politico’s sources, is saying “dammit, something has to happen.”

Where there’s smoke, traders look for fire. Farm-state Republicans are staring at $6.52 diesel at the pump — up 91 cents in a month, nearly $3 from a year ago — with harvest, trucking, and rail all feeling it. Inventories are 13% below the five-year seasonal average. Russia has restricted diesel exports. Ukrainian strikes on Russian refineries and the Iran war have wrecked the global distillate balance. U.S. refiners have been exporting record volumes because the world is short of diesel, not because they hate American farmers.

A blunt export ban is the wrong tool. Keep the barrels home for 90 days and you get a short-term domestic glut and a European panic. Refineries then cut runs because they have nowhere to put the extra diesel. Gasoline and jet rise. When the ban expires you get a snap-back and higher prices later — exactly what the industry warned. Wright is right. The midterms are six weeks away. Political pressure to “do something” about diesel is rising, not falling. Yesterday I wrote that an export ban is not the answer. Today the tape proved the rumor alone is enough to scramble cracks, flip crude, and leave everyone looking over their shoulder. The White House can call it fake news. The market is still pricing the possibility that something — a voluntary squeeze, a reporting requirement, a Jones Act waiver dressed up as relief, or the real thing — is still on the table.



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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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