US lawmakers are considering a potential ban on diesel exports as prices reach record highs, raising concerns over tightening fuel supplies in Europe amid escalating geopolitical tensions. Senate Majority Leader John Thune expressed openness to restricting diesel shipments from the United States, the world’s largest diesel supplier, following a surge in prices to $6.29 per gallon—an increase of 22 percent compared with the previous year.
The sharp rise in diesel costs comes amid growing pressure on the Republican Party roughly two months before the midterm elections and highlights inflationary challenges linked to ongoing conflicts involving Iran. European refineries are currently facing difficulties securing sufficient crude oil to produce diesel, gasoline, and jet fuel after Iran-backed Iraqi militias attacked a key Saudi pipeline last Friday. This pipeline had allowed Saudi Aramco to bypass the Strait of Hormuz, which has been effectively blocked by Iran. Energy analysis firm Kpler estimated that this disruption could reduce global oil supplies by approximately 3.6 million barrels per day, equivalent to 3.6 percent of global demand.
Reports indicate that Saudi Aramco has halted crude oil deliveries to European refineries for the remainder of September, compelling buyers to rely on the spot market. Industry sources suggest no Saudi crude shipments are expected to reach Europe until November. As a result, Brent crude prices have surged above $130 per barrel, marking a 39 percent increase since the beginning of the month and nearing levels last seen during the peak of the Iran conflict in April. The current spot price surpasses the Brent futures price of around $108 per barrel, which reflects market anticipation for conditions two months ahead.
Richard Bronze, an analyst with Energy Aspects, described the current price dynamics as “a scramble for physical oil supply,” underscoring the immediate impact on consumers worldwide. In the United Kingdom, energy consultancy Bloomberg Economics forecasts a 25 percent rise in household energy bills come January, when energy regulator Ofgem is scheduled to adjust the price cap. This could push the UK's inflation rate above 4 percent, pressuring household budgets and potentially prompting the Bank of England to increase interest rates.
Fuel shortages are already affecting motorists, with the average price of diesel in the UK climbing to nearly 192 pence per liter, returning to peaks last seen earlier in the year. The strain on diesel supplies is further worsened by recent Ukrainian drone strikes on Russian refineries. Reuters reported that half of Russia’s six largest diesel producers have significantly reduced or ceased output this month. In response, Russia has extended its own diesel export ban through September 30.
Meanwhile, former US President Donald Trump criticized Ukrainian President Volodymyr Zelensky, urging him to cease attacks on Russian diesel infrastructure, which Trump claimed were exacerbating the global fuel shortage. The current US administration has yet to state a position on a potential diesel export ban. US Interior Secretary Doug Burgum indicated skepticism regarding the policy’s efficacy, stating a ban would be considered only if it would demonstrably lower prices.
The supply tightness coincides with diminishing national oil stockpiles, which governments had previously drawn on to stabilize markets. Continued geopolitical tensions surrounding Iran are expected to maintain upward pressure on energy costs, including British gas and electricity prices. Bloomberg Economics anticipates Ofgem will increase the energy price cap by £427 to £2,150 annually for the average household. The Bank of England is scheduled to announce its next decision on interest rates shortly.