FX.co ★ Heating Oil Plunges on Export Ban Reports

US heating oil futures fell 2.7% to $4.80 per gallon on Wednesday, even as crude prices surged, following reports that the Trump administration was considering a 90-day ban on diesel exports. The proposal has exposed divisions within both the administration and the oil industry, as tight market fundamentals collide with political pressure to contain high diesel prices ahead of the midterm elections.

The US accounts for roughly 20% of global diesel exports, so any temporary ban could flood the domestic market with fuel in the short term. However, once distillate inventories are replenished, such a move would likely force refiners to scale back output at a time when crack spreads are already at record highs.

Distillate prices had reached all-time highs earlier in the month, driven by constrained crude supplies from the Middle East and disruptions to Russian refining capacity, both of which have curbed global fuel availability. The prospect of a US export ban has emerged alongside efforts by President Trump to broker an “energy infrastructure ceasefire” between Russia and Ukraine.