Donald Trump has indicated he may request European countries to release some of their diesel reserves as he considers a ban on US exports of the fuel. This statement follows record-high diesel prices in the UK this week, exacerbated by ongoing conflicts affecting the supply of refined fuels. The UK relies heavily on diesel imports from the US, and with US voters facing increased fuel costs ahead of the midterm elections in November, Trump has threatened to restrict diesel exports.
The UK government is in discussions with the EU regarding the potential supply threats from the US, with a meeting scheduled for Friday. A ban on exports could increase diesel availability in the US market, potentially lowering prices for American consumers. However, experts caution that such a ban could lead to higher diesel prices in other countries unless they can secure additional supplies.
The US is a significant diesel supplier, exporting between 1.2 and 1.5 million barrels per day, primarily to Latin America. European nations, including France, the Netherlands, and the UK, have increased their imports from the US due to reduced availability from Russian and Middle Eastern sources following sanctions related to Russia's invasion of Ukraine and recent Ukrainian attacks on Russian refining capabilities.
On Thursday, Trump was asked if he would urge European nations to release some of their diesel reserves. He responded, "We may do that. They have some diesel." US Treasury official Scott Bessent also called for Europe to prepare for an immediate release of their diesel supplies, stating that US farmers, truckers, and businesses should not bear the burden of rising prices.
Currently, diesel prices in the UK have reached record levels, nearing 200p per litre, with over half of the UK's diesel being imported, and 31% of those imports coming from the US. The Netherlands and Belgium together account for more than a third of UK diesel imports.
UK Energy Minister Martin McCluskey participated in a call with European counterparts to discuss the potential export ban. A source familiar with the discussions noted the importance of a coordinated response with other countries, while also mentioning that there are still European reserves available from a previous coordinated release of strategic fuel stocks earlier this year.
The UK government has emphasized that there is no immediate cause for concern regarding diesel shortages, although prices are expected to continue rising. According to International Energy Agency regulations, member states, including the UK, must maintain oil stocks equivalent to 90 days of net oil imports, while EU regulations require reserves to cover 61 days of domestic consumption. The EU collectively holds nearly 109 million tons of emergency crude and fuel stocks, with approximately one-third in diesel and related products.
A spokesperson for the European Commission stated that numerous discussions are ongoing regarding the diesel situation, including high-level contacts with the US administration. Additionally, Chinese refiners have reportedly halted October exports of certain fuel products to prioritize domestic supplies, further impacting the global diesel market.
Since the onset of the US-Israel conflict in Iran in February, petrol and diesel prices worldwide have surged, partly due to the closure of the Strait of Hormuz, a critical route for oil and gas transport. An export ban from Russia, another major diesel supplier, has also contributed to price pressures.
Trump has argued that retaining surplus diesel in the US would lower domestic pump prices, providing immediate relief to consumers ahead of the midterm elections. However, David Fyfe, chief economist at Argus Media, warned that cutting off American supply could lead to a significant increase in international prices.
As of now, diesel prices in the UK have reached an all-time high, with the latest figures from the RAC showing average pump prices at 199.79p per litre, up from 142.38p. Diesel is more challenging to refine than gasoline and is essential for the haulage industry and agriculture, making it difficult to reduce demand. The UK has four refineries that produce sufficient petrol but not enough diesel to meet the country's requirements. As of June, there were 15.1 million diesel vehicles on UK roads, a decrease from 15.7 million the previous year, with diesel cars also declining from 10.4 million to 9.8 million.