Talk of US export ban on diesel deepens US crude futures' discount to global benchmark
USO•WTI traded as much as $12.02 a barrel below Brent, its widest discount since May 6, as talk of a possible US diesel export ban raised expectations that refiners could cut crude processing. Analysts estimate a ban could reduce refinery crude runs by as much as 12%.
1. Crude discount widens
Washington's discussion of a possible diesel export ban has widened the gap between US crude futures and Brent. WTI traded as much as $12.02 a barrel below Brent on Thursday, its largest discount since May 6.
2. Refinery cuts possible
Analysts say US refiners could cut crude runs by as much as 12% if diesel exports are banned. Wood Mackenzie estimated that a 700,000-barrel-per-day diesel and gasoil oversupply could fill Gulf Coast inventories to capacity in just over a month, forcing refiners to reduce crude runs by more than 2 million barrels per day.
3. Ban remains uncertain
The White House denied reports it was preparing a 90-day ban, and Energy Secretary Chris Wright said a ban would not bring surging prices under control. President Donald Trump said he backed a ban, while Wright has contacted executives at major refiners to gauge support for voluntary restraint. Higher shipping costs have also weighed on demand for US crude exports: Gulf Coast-to-Asia tanker freight costs are around $50 million, compared with $16 million before the Iran war.
