U.S. diesel tops $6.45 a gallon as Congress weighs export ban
Wars in Ukraine and the Middle East have driven diesel exports from Russia and the Persian Gulf sharply lower, tightening global supplies of a fuel that powers much of the world’s industry, transportation and agriculture and pushing U.S. pump prices to records. Diesel eclipsed $6 a gallon in the United States for the first time last week and has kept climbing, hitting $6.45 on Friday, rattling governments and markets around the world that rely on diesel as the workhorse of their industry.
The Iran and Ukraine wars left the United States as the producer of last resort for diesel and other refined products, and momentum is now growing in Congress to ban exports of the fuel to lower domestic prices ahead of the midterm elections. Rep. Tim Burchett, a Tennessee Republican, introduced a bill this week to ban diesel exports. Senate Majority Leader John Thune, a South Dakota Republican, said he was open to the idea.
A U.S. ban would likely send prices for the rest of the world soaring and could push other big diesel exporters, including China and India, to follow suit. Russia has already sharply restricted exports because of damage to its refineries caused by Ukrainian drone strikes. China has limited its refinery exports, while India has imposed an export tax on diesel and gasoline.
President Trump has blamed Ukraine’s attacks on Russian refineries for causing most of the disruption, saying this week that “the World’s Diesel price rise is mostly caused by the Russia/Ukraine War, not Iran.” In fact, the diesel blocked in the Persian Gulf is around three times as large as supplies missing from Russia compared with before the Iran war, according to data compiled by the International Energy Agency.
The market for refined fuels is global; products are transported on large tankers around the world, much like crude oil. Before the Iran war, Middle East refiners tended to ship to Asia and Europe, U.S. refiners exported large quantities of diesel to Europe, and European refiners often exported gasoline to the United States. Russia sold diesel to Turkey, India and China. The squeeze on the Strait of Hormuz and the Ukraine war have short-circuited those trade flows.
Kuwait, the United Arab Emirates and Iraq have been forced to slash diesel exports. The escalation of Houthi attacks in recent weeks has limited Saudi Arabia’s exports from its Red Sea refineries, hitting the country’s main route to bypass the Strait of Hormuz. The disruption has been compounded by Ukraine’s increasingly successful attacks on Russian refineries, which have nearly halted Russian exports. The difference between the price of crude and the price of diesel in many markets also hit a record high.
“We are seeing the emergence of a tighter diesel market than we’ve probably seen in any previous period,” said David Martin, senior oil market analyst at the IEA.
The U.S.-Israeli attack on Iran in February came after a decade of major refinery construction in the Middle East led by the region’s national oil companies. Kuwait National Petroleum Company built one of the world’s biggest oil refineries at Al-Zour. The UAE boosted capacity at its Ruwais refinery and Iraq opened a new refinery at Karbala. Saudi Aramco built two refineries near the Red Sea. The projects more than doubled diesel exports from the Middle East between 2017 and 2025, when the region accounted for 19% of global exports and jumped ahead of North America as the world’s top diesel exporting region.
Russia has also expanded its diesel production, not by building new refineries but by upgrading existing ones. Russian exports rose by one-third between 2017 and 2023, when Ukraine began to take out Russian production with its drone attacks.
The major refinery investments have had a knock-on effect: They put pressure on refining margins across the United States and Europe. Western oil companies have not built new refineries in nearly 30 years, while more than a dozen facilities across the United States and Europe have shut down since 2015.
When national oil companies built the refineries, return on investment was a secondary concern, said Alan Gelder, senior vice president of refining, chemicals and oil markets at the consulting firm Wood Mackenzie. Governments paying for them were more interested in providing employment and assuring fuel security. “We’ve seen the oil majors effectively reduce their exposure to that sector because the returns on actual capital employed have been poor,” Gelder said. “The classic phrase we used was: ‘How do you make a small fortune? Take a large fortune and build a refinery.’”
Refineries in the West have been running near capacity and shifting to diesel production, away from other refined products such as gasoline and jet fuel. That has not been enough to fill the gap left by the Middle East and Russia. China is the one country outside the Middle East and Russia with significant spare refining capacity, yet its refiners have limited their crude oil purchases and avoided running their facilities at full capacity. Gelder said the reason for that could be that China, the world’s largest crude importer, wants to avoid driving up the price of crude.
“I think there’s an element of energy security, energy resilience,” Gelder said. “That’s probably in aggregate better for them overall rather than allowing their refiners to chase that margin in the export market.”
Shortages have appeared at gas stations in rural Brazil, in Libya and in some African nations that cannot afford to import the fuel.