A US diesel export ban would knock US prices down by roughly 25 cents per gallon each week — about 4% off the current $6.50/gal — while lifting European wholesale prices by $3 per barrel, or around 2%, Goldman Sachs analysts said in a report.

The figures frame a scenario the bank calls a "very plausible scenario, though not our base case." Washington is weighing export curbs to tame surging domestic diesel prices after the US-Israel war with Iran disrupted Middle East supplies. The US is the world's largest diesel exporter.

The market backdrop explains the pressure. The Platts-assessed US Gulf Coast Export ULSD price hit an all-time high of $4.7833/gal on Sept. 16.

The storage ceiling problem

The mechanics of a ban carry a built-in time limit, according to Goldman. Diesel, gasoline and jet fuel are largely produced together, so throttling diesel output drags gasoline and jet supply down with it.

"Therefore, downward pressure on diesel production can mean downward pressure on gasoline production, i.e. upward price pressure on gasoline," the analysts said.

Two dynamics would compound as the ban runs. First, as US diesel stocks approach storage limits, downward pressure on diesel prices would intensify, compressing US refining margins and likely pushing refiners to cut runs. Second, once diesel storage fills completely, US retail gasoline prices would likely rise by 30 cents/gal — a politically toxic side effect for any administration attempting to cap pump prices by restricting exports.

Europe's offset and the reconnection shock

On the other side of the Atlantic, releases from European strategic diesel reserves could offset roughly half of the projected $3/bbl increase in wholesale prices, the analysts estimated. That cushion matters because Europe leans heavily on US barrels when Middle East flows run thin.

The endgame carries its own disruption. If the ban is lifted, "US diesel prices would likely reconnect with prices elsewhere, including Europe, putting upward pressure on US diesel prices and downward pressure on prices abroad," the report said. Even so, post-ban global refined product prices would likely remain higher than in a counterfactual with neither a ban nor the associated drop in US refinery output — meaning the policy would leave a permanent mark on global supply.

The trade: buy European gasoline

Goldman is explicit about the commercial read: buy European gasoline. Gasoline markets are "tightening rapidly," and any US ban extending to gasoline would tighten markets outside the US further. The asymmetry is stark — Europe's gasoline strategic reserve holdings are four times smaller than its diesel reserves, leaving the gasoline market far more exposed to a supply shock.

For tanker operators and product traders, the calculus is direct. A US export ban would idle ULSD tonnage on the US Gulf Coast–Europe route, one of the busiest product trades in the world, while European buyers scrambled for alternative supply from India, the Middle East and Asia — lengthening ton-miles but raising landed costs. US refiners, meanwhile, face margin compression and eventual run cuts as domestic storage fills.

The Platts-assessed record of $4.7833/gal on Sept. 16 shows how tight the baseline already is. Whether Washington pulls the export lever or not, Goldman's analysis points to a market where refined product prices stay structurally higher on both sides of the Atlantic through any ban and after it.