The transatlantic alliance faces another crisis, this time over diesel. President Donald Trump and senior officials, including Treasury Secretary Scott Bessent and Energy Secretary Chris Wright, have threatened to ban or sharply restrict US diesel exports. Washington has told European allies, France and Germany in particular, to tap into their national emergency stockpiles at once or face a cutoff of American shipments. It has asked the European Union to release 120 million barrels of diesel over six months. The stakes are high because the US exports 1.2 million to 1.5 million barrels a day, and any curb would hit energy security across Europe, Canada and Latin America.
The root cause is a compounding deficit in global refining capacity. The US-Israel war against Iran has disrupted Middle Eastern crude production and tanker traffic through the Strait of Hormuz. Ukrainian drone strikes have crippled Russian refineries, prompting Moscow to extend its own diesel export ban. China has also curtailed fuel exports to protect domestic reserves. Diesel prices have since risen far faster than crude. In the US, retail diesel has jumped by nearly 70 per cent to record levels of $6.38 to $6.50 per gallon.
The timing owes much to domestic politics. The threat arrives less than five weeks before the American midterm elections in November, with fuel costs dragging down voter sentiment and cost-of-living ratings.
Republicans, who appear to be in such bad shape, are eager for any lever that lowers prices at the pump. Administration officials argue that holding back exports would keep surplus fuel at home and offer quick relief to truckers, farmers and logistics firms. Bessent said American businesses and citizens should not carry the burden of a global energy deficit.
Energy experts believe that an export ban might ease prices inside the US for a while, but the fallout abroad would be severe and would eventually return home. They warn of a supply shock comparable to the 2022 European gas crisis, which pushed gas prices up by more than 180 per cent. Developing nations without refineries would face shortages almost at once. Diesel also moves freight, farm machinery and cargo ships, so rising costs would cause global inflation in food, consumer goods and manufacturing to go up.
European leaders have coordinated urgently while resisting immediate compliance. Officials from Britain, Germany, France, Italy, Ireland and the European Commission held emergency consultations to settle on a common line. However, while releasing reserves could placate Washington and cool pump prices, emptying emergency stocks ahead of winter would leave the continent exposed if the war in the Middle East worsens. European energy commissioner Dan Jørgensen stressed that free energy flows benefit all parties. French President Emmanuel Macron has opened G7 talks with the International Energy Agency to coordinate any release of reserves.
Europe is unusually exposed because of choices it made itself. Refining capacity shrank in recent years under high operating costs and tight climate rules. After Europe banned Russian energy imports following the invasion of Ukraine, it came to depend on American refined products, which supply roughly one-third of its diesel imports. In Britain, where domestic refineries cannot meet national demand, pump prices have touched a record high. Industry groups warn that fuel insecurity threatens haulage, agriculture and defence operations.
Asia would feel the shock through prices rather than cargoes. The region relies mostly on its own refiners in South Korea and China and receives only a small share of US diesel. But if Europe loses American supply, European buyers will bid up Asian cargoes and hold regional benchmarks near $180 per barrel. Southeast Asian nations and Australia, the main diesel importers, face rising inflation. Indonesia and Malaysia have already expanded energy subsidies, straining their budgets. China, which holds the only sizeable spare refining capacity in the world, will decide how far the pain spreads through its export quotas.
