Global Refining Squeeze Drives US Diesel to a Record $6.52 as Export Ban Fight Flares
US diesel set a record national average of $6.52 per gallon while Washington sent conflicting signals on a 90-day distillate export ban. With global refinery throughput still 4.2 million bpd below year-earlier levels, refiners warn that blocking exports would cut runs and push gasoline and jet fuel higher.
The US national average diesel price climbed to a record $6.52 per gallon, prompting a renewed political fight over restricting fuel exports. President Donald Trump publicly floated limiting diesel shipments and Treasury Secretary Scott Bessent said feasibility was under review, but Energy Secretary Chris Wright and the White House subsequently ruled out a blanket ban. Wright argued that blocking exports would leave refiners with nowhere to store product, forcing run cuts that would lift gasoline and jet fuel prices as well as diesel.
The political noise sits on top of a genuinely tight physical balance. The International Energy Agency reported that global refinery throughputs reached a summer peak of 81.4 million bpd in August, up 960,000 bpd month on month but still 4.2 million bpd below a year earlier, with losses concentrated in the Middle East, Russia and crude-importing Asian economies. Phillips 66 executive Brian Mandell estimated roughly 7 million bpd of refining capacity down in Asia and the Middle East plus another 1.4 million bpd offline in Russia, and Russia has banned diesel exports through the end of September with an extension into October likely.
US supply is ample in aggregate but geographically uneven. Refiners are producing about 5.3 million bpd of distillate against domestic demand of roughly 3.6 million bpd, according to the American Fuel and Petrochemical Manufacturers, but state-level prices diverge sharply: as of September 20 the Texas statewide diesel average was $5.9779 per gallon against $8.4244 in California, with regular gasoline at $3.9480 and $6.1533 respectively. Only about 1 million bpd of the estimated up to 10 million bpd of outbound Hormuz flows is refined product, so the chokepoint is not relieving the product shortage.
Downstream stress is spreading beyond the pump. Several airlines have announced flight cuts in response to higher aviation fuel costs, and petroleum product inventories have fallen close to minimum operating requirements. Three dozen industry associations including API, AFPM, the National Association of Manufacturers and the US Chamber of Commerce wrote to the president warning that export bans would reduce US fuel production, tighten supplies and invite retaliation, while Capital Economics titled its latest note 'US export ban would add fuel to the diesel crisis'.