Goldman Sachs models a potential ban on diesel exports from the US.

Goldman Sachs models a potential ban on diesel exports from the US.

Initially diesel in the US is down ~$0.25 per gallon for the week of the ban.

But the longer it goes on, the worse it gets.

Diesel/gasoline are co-produced, so reducing diesel output pushes gasoline up by about $0.30/gal once storage fills up.

Meanwhile wholesale diesel in Europe is up ~$3/bbl/week (~2%), partially offset by SPR releases.

After the ban is lifted, global prices will still be higher than without it due to the loss of US refinery output.

Goldman recommends hedging using long gasoline positions in Europe.