US ultra-low-sulfur diesel futures fell more than 6% on Wednesday after Politico reported that the administration of President Donald Trump was preparing a plan to ban diesel exports for 90 days, Reuters reported.
The October futures contract was last trading at $4.7512 a gallon, down 3.9%.
However, a White House official said a report that the US was considering a 90-day diesel export ban to curb record fuel prices was “fake news,” Reuters reported.
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US Energy Secretary Chris Wright had earlier said such a ban would not work and could push up gasoline and jet fuel prices, although the US was discussing voluntary measures.
The White House official also said reports that the US was considering a flat, temporary export ban were incorrect, Reuters reported.
Diesel prices have surged to record highs in the US and Europe as wars in Iran and Ukraine have disrupted exports from major producers, including Russia, Saudi Arabia and the United Arab Emirates.
Trump said on Tuesday that he supported a diesel export ban, as Republican candidates in some of the most closely contested November election races backed the measure as a way to bring down record fuel prices.
How US diesel export ban could impact Europe and the world
A US ban on diesel exports could prove counterproductive, doing little to ease elevated domestic fuel prices while potentially worsening supply constraints and economic disruptions worldwide, analysts said, according to Reuters.
Average US diesel prices have surged to a record $6.5107 a gallon, according to AAA. Diesel is vital to the global economy, powering transportation, agricultural equipment and machinery used to produce and transport goods.
A ban could prompt US refiners to reduce crude processing, analysts said. Lower refinery runs would also cut production of gasoline and other petroleum products, potentially pushing up prices for those fuels, according to Reuters.
The American Petroleum Institute, a major industry trade group, said restricting US diesel exports could disrupt fuel markets domestically and overseas, destabilise refinery operations and intensify a global refining crisis.
European diesel prices have reached record highs, while prices in Asia remain close to records set in March.
Global prices could rise further as buyers across Latin America, Europe, Africa and Asia compete for a smaller pool of available supplies, consultancy FGE NexantECA said.
Even a partial US diesel export ban could result in product shortages across Europe, South America, Australia and Africa, Citi analysts said.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)
