United States President Donald Trump has called for a ban on US diesel exports as record-high domestic fuel prices drag down his popular support.
Author
- Robert Monterosso
Research Fellow, United States Studies Centre, University of Sydney
With the US midterm elections looming, a proposed export ban appears to be a bid to reinvigorate Trump’s voter base.
As tensions escalate in the Middle East and global fuel reserves reach a critical low, Trump’s proposal could have major ramifications for the global economy and Australia – the largest per capita consumer of diesel among developed nations.
The White House has watered down the President’s statements , but Energy Secretary Chris Wright says the administration is considering restrictions .
Trump’s approval rating at record low
President Trump returned to office in January 2025 with pledges to tame inflation, cut fuel prices and end foreign wars. But with the US midterm elections just six weeks away, voters see Trump going backwards on all three of those promises.
US inflation is sitting at 3.4% , well above the Federal Reserve’s target rate of 2%. The Fed has increased interest rates for the first time in three years, intensifying cost pressures for households and small businesses.
Fuel prices have soared 50% since the start of the US-Iran conflict, putting serious strain on households. The pain has been most acute in Republican strongholds across rural America .
Voters are unhappy with the Trump administration’s decision to wage war with Iran. The conflict has become the least popular war in US history, just beating Vietnam , and Trump’s own approval rating has hit a career low of 32% .
In the upcoming midterms, the Republican Party is widely expected to lose its slim majority in the House. Worryingly for Trump, there’s a growing likelihood of the Republicans also losing the Senate . Losing both chambers would be a worst-case scenario for Trump, and severely limit his ability to pass legislation.
Why a diesel export ban would hurt the US and world
The United States is the world’s largest exporter of diesel, producing around 20% of the world’s supply . With another 20% of global oil supply blockaded in the Strait of Hormuz, fuel markets are near breaking point.
The situation is increasingly dire. Efforts by Saudi Arabia to reroute oil exports through its East-West pipeline and towards the Red Sea have been tripped up by an Iran-backed Houthi militia, which launched a drone strike on the pipeline and are setting up a separate blockade on the Red Sea .
Ukraine’s continued attacks on Russian oil production has led Putin to extend his full ban on diesel exports. Trump has asked Ukraine to stop targeting Russian oil refineries.
At the same time, global fuel reserves are reaching a critical low as the northern hemisphere creeps towards peak winter fuel demand.
A ban on US diesel exports would add serious strain, increasing diesel prices and impacting the global economy. Australia, as the largest per capita consumer of diesel among developed nations, is particularly vulnerable to a potential diesel shortage.
Although Australia does not import diesel from the US, outside of an emergency shipment sent in March, Australia is vulnerable to global diesel prices which would rise quickly if the US restricted its exports, and could even lead to fuel rationing .
It would also hurt America. Although domestic diesel prices would fall, the US would be flooded with supply, to the point where US refineries would have to slow down production. This is why the White House has ruled an outright ban, but other options are still on the table.
What could Trump do next?
Although an outright ban on diesel exports is likely out of the equation, the Trump administration will be looking for ways to bring down fuel prices at home.
Energy Secretary Chris Wright, speaking soon after Trump called for the diesel export ban, highlighted a plan to allow American fuel markets to voluntarily direct exports toward the US market. With details still forthcoming, this could include a financial incentive for fuel makers, potentially through tax concessions.
The global diesel shortage could be discussed at the Trump-Xi summit in Washington DC which began this week. China is also a significant producer of diesel – working together to increase global supply could avoid the worst of an impending supply crunch.
The White House could opt for an export quota, setting a cap on how much diesel leaves US shores. This would potentially mitigate the risks of flooding the domestic market. The Trump administration might also want the quota to be applied selectively to different countries, giving the US another bargaining chip in trade negotiations.
Major diesel consumers like Australia must be alert to the potential risks to their supply chains. With global fuel markets reaching breaking point, Trump’s next decisions could tip the balance of the global economy for better – or worse.
