Donald Trump has stated that he may request European countries to release some of their diesel reserves while considering a ban on US exports of diesel fuel. This statement follows a surge in diesel prices in the UK, which have reached record highs this week, influenced by ongoing conflicts affecting the supply of refined fuels. The UK relies significantly on diesel imports from the US, and with midterm elections approaching in November, US voters are also experiencing increased fuel costs, prompting Trump's consideration of export restrictions.
The UK government is in discussions with the EU regarding the US's supply threats, with a meeting scheduled for Friday. A ban on exports could potentially increase the diesel supply in the US market, leading to lower prices for American consumers. However, experts caution that such a ban might exacerbate diesel prices in other countries unless they can secure alternative supplies.
The US is a key supplier of diesel globally, exporting between 1.2 and 1.5 million barrels per day, with over half of the UK's diesel imports coming from the US. During a recent inquiry, Trump indicated that he might call on European nations to release their diesel reserves, stating, "We may do that. They have some diesel."
US Treasury official Scott Bessent has urged Europe to prepare for an immediate release of their diesel supplies, emphasizing that US farmers, truckers, and businesses should not bear the burden of rising prices alone. Diesel prices in the UK have reached approximately 200 pence per litre, according to the RAC.
UK Energy Minister Martin McCluskey held discussions with European counterparts on Thursday regarding the potential export ban. A source familiar with the talks mentioned the importance of a coordinated response with EU countries, while noting that there are still reserves available from a previous coordinated release earlier this year. The UK government has assured that there is no immediate cause for concern regarding diesel shortages, although prices are expected to continue rising.
International Energy Agency regulations require member states, including the UK, to maintain oil stocks equivalent to 90 days of net oil imports, while EU regulations mandate reserves covering 61 days of domestic consumption. The EU holds nearly 109 million tons of emergency crude and fuel stocks, with about one-third in diesel and related products.
A spokesperson from the European Commission indicated that numerous discussions and meetings are ongoing regarding the diesel situation, including high-level contacts with the US administration. Additionally, reports suggest that Chinese refiners have halted October exports of certain fuel products to prioritize domestic supply, further impacting the global diesel market.
Since the onset of the US-Israel conflict in Iran in February, global petrol and diesel prices 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 significant diesel supplier, has also contributed to rising prices.
Trump has argued that retaining surplus diesel within the US could lower domestic pump prices, providing immediate relief to consumers ahead of the elections. However, David Fyfe, chief economist at Argus Media, warned that restricting American supply could lead to a spike in international prices.
The RAC reports that diesel prices in the UK have reached an average of 199.79 pence per litre, up from 142.38 pence. Diesel is more challenging to refine than gasoline and is essential for the haulage and agricultural sectors, making demand reductions difficult. The UK has four refineries that produce sufficient petrol but not enough diesel to meet the country's needs. As of June, there were 15.1 million diesel vehicles registered in the UK, a decrease from 15.7 million the previous year, with diesel cars also declining from 10.4 million to 9.8 million.