Morgan Stanley says diesel ban could raise gasoline prices

Morgan Stanley warned that a US diesel export ban could raise gasoline prices. The bank estimates that a ban would force refiners to cut runs by about 2 million barrels a day. The bank estimates gasoline output would fall by roughly 650,000 barrels a day even if processors shifted yields toward gasoline. Morgan Stanley expects US diesel prices to fall under a ban. It expects overseas diesel costs to rise. The bank identified Europe as the region with the greatest exposure. The bank said a ban is not its base case. The bank expects oil prices to remain volatile during the debate. President Donald Trump said he backs an export ban. Treasury Secretary Scott Bessent said the administration was studying whether blocking exports could provide relief. Bessent said officials were assessing whether a full or partial ban would work within overall refining capacity. Interior Secretary Doug Burgum and Energy Secretary Chris Wright argued against a ban. Goldman Sachs issued a similar warning on Wednesday. Goldman Sachs commodities research co-head Daan Struyven said cheaper diesel would give refiners a reason to produce less. Struyven said gasoline and diesel are usually produced together with some flexibility. AAA averages cited by Bloomberg showed diesel had risen 74% since February 27. Diesel reached $6.52 a gallon on Tuesday. AAA reported a national gasoline average of about $4.47 on September 24. AAA reported an average of $2.98 on February 26. The article said gasoline had gained roughly 50% since the war in Iran began. Struyven said the policy design would matter. He cited the choice between a ban and a quota. He also cited incentives to keep refiners running.