The Trump administration is even tinkering with the export ban card to raise diesel prices, and if this actually happens, it is expected that the global economy will suffer a serious chain shock.
Diesel oil is the core energy that runs the means of production across industries, including ships, cargo trucks, agricultural machinery, and heavy equipment. There is a risk that supply shortages will stimulate an economic slowdown and rising prices.
U.S. President Donald Trump is considering banning diesel exports as a measure to curb high inflation, a major negative factor ahead of the midterm elections in November.
The price of diesel fuel in the United States has soared 70% compared to the same period last year, exceeding $6.50 per gallon, hitting people's livelihoods, and public opinion toward the ruling party is worsening.
The Trump administration sent an ultimatum to Europe, threatening to ban U.S. diesel exports unless it releases strategic oil reserves to stabilize diesel prices.
The European Union (EU) Commission plans to hold an emergency response meeting with member countries on the 2nd (local time) to resolve fuel price issues, including pressure from the United States.
Experts predict that if the U.S. government restricts diesel exports, prices in the U.S. will be briefly suppressed, but the rest of the world will take a hit.
Robert McNally of Rapidan Energy Group, an American consulting firm, said in an interview with the New York Times, "It will be a huge shock and blow."
He explained, “Except for the United States, the rest of the world has no choice but to accept the huge increase in the price of raw milk.”
Capital Economics, a British economic research institute, was concerned about a situation comparable to the natural gas crisis in Europe in 2022 due to Russia's invasion of Ukraine.
At the time, Russia blocked pipelines supplying natural gas to Europe in response to Western sanctions, causing a surge in fuel, electricity, and living costs in Europe.
As Europe, shocked, paid more money to purchase a large amount of marine liquefied natural gas (LNG), emerging countries around the world with poor finances suffered a more serious energy crisis.
In Europe, it is expected that the disruption in energy supply and demand caused by wars in the Middle East and Eastern Europe will further worsen if US diesel is blocked.
Russia refrained from exporting diesel fuel and began stockpiling it at home as Ukraine continued to attack oil refineries, triggering a fuel shortage.
During the war with the United States, Iran destroyed oil refineries in neighboring countries and threatened the Strait of Hormuz, a maritime transportation route, causing a supply crunch.
In addition, as Europe reduced its own oil refineries due to eco-friendly policies, its dependence on American diesel increased to about one-third of the total in addition to these negative factors.
Europe faces a bitterly cold winter with natural gas inventories used for heating and power generation at an all-time low.
Fatih Birol, Secretary-General of the International Energy Agency (IEA), pointed out ahead of the recent European Union (EU) energy ministers' meeting held in Dublin, Ireland, "The most vulnerable place to diesel is Europe."
Not only Europe but also American countries such as Canada and Mexico, which count the United States as their largest diesel supplier, are also in a position to be concerned about widespread shocks.
Diesel is a power source for heavy equipment essential for heavy industry, trucks and ships essential for logistics, and agricultural machinery, which are agricultural tools, and is called ‘workhorse fuel’, a ‘powerhouse of industry’.
Therefore, when the price of diesel fuel rises, production and transportation costs rise across all economic activities, and the prices of all daily necessities, from gasoline at gas stations to groceries at local stores, rise.
Central and South American countries such as Honduras and Panama, which have no oil refining facilities and depend on the United States for imports, are concerned about not only simple losses but also catastrophic situations.
Asia is expected to be less directly affected by the US ban on diesel exports compared to other regions, including Europe.
This is because the quantity is mainly procured from countries classified as major diesel producers, such as Korea and China.
However, in a situation where the entire world is effectively one market, it is expected that there will be a significant shock because an increase in the price of diesel fuel is inevitable.
Sushant Gupta, director of petroleum research at British consulting firm Wood Mackenzie, pointed out to the NYT that the problem is the rapid rise in diesel prices around the world.
Director Gupta explained, “The world is already reeling from a shortage of diesel fuel. If there is a shortage of diesel fuel in Europe, other suppliers will provide more money, and the world, whether it is Asia or Europe, is all connected.”
Southeast Asian countries such as Vietnam, the Philippines, and Indonesia are said to be already suffering from high prices and serial price increases.
China's trends are pointed out as an important variable in the global diesel market.
When the war between the United States and Iran broke out, China restricted diesel exports, fueling high prices in major importing countries.
Experts say that if the United States stops exporting diesel, the only country with the export capacity to fill the gap is China, the world's largest producer.
