Depending on the location, a partial prohibition on US refined product exports might have a positive or negative influence on balances and flows and lead to higher or lower prices.

Rising costs for petrol, diesel and jet fuel are severely affecting US companies and individuals. The US government recently proposed prohibiting the export of refined products in an attempt to partially offset these price effects. The idea was to disconnect the US from foreign markets by halting the nearly two million barrels per day (mbd) of product exports, which would lead to a glut of supply on the domestic market and ultimately drive down prices.

A number of factors contributed to the petrol price reaching an all-time high in June, including: a sharp decline in Chinese exports to the global market; a strong post-pandemic recovery of product demand; disruption of supply from Russia due to the conflict in Ukraine; loss of global refining capacity due to the Covid-19 pandemic and lower long-term-demand expectations owing to the energy transitions; and all of the above. Due to these factors, prices have increased internationally. Since US products are linked to the world market through imports and exports, an export restriction would be the best method to sever this connection and lower costs.

Removing US refined product exports from the international market would eliminate almost 1.7 million barrels of direct petrol, diesel and jet fuel exports. The US Gulf Coast (USGC), whose refining capacity greatly exceeds local demand and where excess product can be effectively transported to other regions of the nation (by pipeline and barge), is the source of the majority of product exports. The bulk of USGC was produced in 2021 for local use; the majority of exports went to Latin American markets where there was a lack of refining capability. A little amount of diesel is imported into Europe, where it faces competition from Asian imports.