TD Cowen: US Diesel Export Quota Seen as More Likely Than Full Ban

A U.S. diesel export quota appears more likely than a complete ban on oil or product exports, though any such controls remain unlikely in the near term, according to a research note from TD Cowen. The firm stated that investor attention is increasingly focused on potential government restrictions as diesel prices reach record levels ahead of the November 3, 2026, midterm elections.

Potential Market Impact

TD Cowen's analysis suggests that a temporary, two-month export quota could push domestic diesel prices down by approximately $16 per barrel and reduce refining margins by $11 per barrel. Analyst Jason Gabelman noted prices could fall further as inventories build, potentially finding a floor near gasoline prices as refiners shift production away from diesel. Currently, spot diesel prices are trading at a significant premium of $60 per barrel above gasoline.

Specific companies could see varied exposure to such a policy. According to the firm, the refiners most at risk include:

• PBF Energy (PBF) and Delek US Holdings (DK), due to their large U.S. mainland presence.
• BP could face the largest headwinds among international oil companies because of its U.S. refinery footprint.
• Par Pacific Holdings (PARR) and Phillips 66 (PSX) are expected to see a more limited impact.
• TotalEnergies (TTE) could potentially experience a net benefit.

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Policy Rationale and Context

The U.S. currently exports 1.6 million barrels per day (bpd) of diesel, which is 300,000 bpd above historical norms, while importing about 180,000 bpd, primarily to the East Coast. TD Cowen calculates that a quota set roughly 200,000 bpd below current export levels could eliminate the need for U.S. diesel imports and effectively disconnect domestic prices from more expensive global markets.

However, the firm's Washington Research Group analyst, John Miller, indicated that the Trump Administration’s policy preference leans toward boosting supply through measures like Strategic Petroleum Reserve exchanges and regulatory waivers. Any export control measure would most likely be a time-limited action designed to provide political cover while minimizing long-term market distortions, the firm concluded.