Following the Russian invasion of Ukraine in 2022, Europe decided to stop importing Russian Diesel. As Russia accounted for around 50% of what north-west Europe imported by sea, an alternative had to be found: America. The main priority was getting off our reliance on Russian fuel, with less attention given to what would happen if the new supplier kept its fuel at home. This changed on September 22nd, when Donald Trump stated he would back a diesel export ban. The markets immediately reacted, with the gap between European diesel and crude oil prices hitting a record, and British diesel hovering at all-time highs. A short ban would hurt, but one that lasts beyond the winter would have more severe consequences, with prices hitting new highs before higher interest rates follow.
Luckily that ban never came. On 2 October, after the G7 agreed to release up to 100 million barrels of emergency fuel, Trump dropped the idea and told reporters “we were never going to do it”. Not a single barrel was ever withheld, but the previous threat alone was enough to set records in Europe and run down part of the continent’s emergency reserves. That is the part paying attention to.
Washington’s Statement:
Officials were studying “whether a full or a partial ban would work”, said Treasury Secretary Scott Bessent. Although Energy Secretary Chris Wright insists the U.S. “will not cease exports”, he hinted that “voluntary” changes were not ruled out. The motivation for such a policy is easy to understand. Currently, American diesel costs $3 a gallon more than it did a year ago, a potential export ban would immediately trigger a price drop, which would be very beneficial for the U.S., and thus a valuable tool to gather support for the incoming midterms on November 3.
How Did Europe Get Here?
The EU was only able to ban Russian diesel in 2023 without suffering dire consequences because it managed to subsidise the missing imports from Middle Eastern and American imports. The recent war in Iran, however, effectively halved Middle Eastern exports, and with Russia and China (who also recently restricted exports) outside the picture, America is the last man standing. Kpler, a data firm, says the U.S. now supplies almost 60% of what North-West Europe imports from outside the region, up from 37% last year. It is for this reason that the proposed ban was called “catastrophic” by Emmanuel Macron, and Britain would not be an exception. In 2025, two important refineries, Grangemouth and Lindsey, shut down, which brought UK refining capacity to a record low. This adds pressure to an already dire circumstance, as more than half of our road diesel is imported from outside and one third of that comes directly from America.
Why the Length Matters:
Although a short ban could be ridden out with the help of Europe’s emergency stocks, it is a long one to pose a more radical challenge. This July, Amsterdam, Rotterdam and Antwerp, which are the main fuel hubs of the EU, were already about 15% below standard, and the industry expects this to continue, as supply will most likely stay tight throughout the winter. Outside of the Middle East, refineries are already running close to full capacity, which means that simply producing more fuel is not an option. Buyers would be chasing the same few cargoes, which Kpler warns could push prices sharply higher.
Josh Michalowski, from the price-reporting firm Argus Media, told the Telegraph a U.S. ban “would be devastating for diesel supply in Europe”, but added that supply is “unlikely to run dry. Prices would just be very high.” Europe already experienced something similar in the past: in 1973, when Arab oil producers embargoed the U.S. and Netherlands over the Yom Kippur War, and when they violently cut their output, prices roughly quadrupled within a few months. Even though Europe’s own stockpile did manage to provide a short-term cushion, it was against a hostile bloc using oil as a weapon against a unified West. This time the same struggle is being discussed within that same alliance that stopped the 1973 embargo to aggressively escalate.
Risk of Recession?
Although most students never directly buy diesel, we all pay for it somehow. This includes through lorries that stock up our supermarkets and shops: the effects of more expensive diesel spreads everywhere through our daily lives indirectly. When fuel and food get more expensive, inflation goes up with it, causing banks to try and bring it down by raising interest rates so that mortgages and loans cost more which makes people spend less. If spending falls, however, the economy shrinks. In fact, UK inflation reached 3.1% in August, well above the Bank of England’s target of 2%, mainly due to energy prices. And there is no signs of this cooling off soon, as three of the Bank’s nine rate-setters voted for a raise this September, even though the European Central Bank has already raised rates twice this year alone. Governor Andrew Bailey warned that “the longer this volatility persists… the more likely it is we will need to raise the Bank rate”.
BlackRock’s chief executive, Larry Fink, doesn’t think this is far fetched. Asked in March what a year of $150 oil would entail, amid the Iran war, he flatly replied: ‘We will have a global recession.”
Is This Overly Pessimistic?
Partly. Britain is unlikely to run out, simply because Belgium and Netherlands alone supplied more than a third of our diesel imports last year. The pressure on Washington to drop the idea was also heavy: Wright has ruled out a full stop, America’s biggest business corporations have written to Trump opposing a ban, and U.S. and Iranian negotiations reportedly were discussing a possible reopening of Hormuz.
However, Europe so far has survived the struggle of the already expensive fuel prices with the support of American oil, which is exactly what a ban would do. As for Hormuz, a similar deal in June quickly collapsed.
Europe’s Lesson:
Had the ban landed in January, when demand is high and stocks thin, the consequences for Europe would have been drastic, and Britain would have felt them early, as two refineries have already been closed. Trump, in July 2025, imposed tariffs if the EU didn’t buy more American oil and gas. And Europe did. RUSI, a think tank, has warned that such a reliance could potentially lead to “new and potentially equally powerful vulnerabilities”, which is exactly the risk of the ban we’ve been discussing. Theoretically, an ally, the U.S., should be a safer supplier than an adversary like Russia. However, that ‘safer’ option still answers their own voters first. Europe needs bigger emergency stocks of diesel, and more refining capacity so that it does not become extremely susceptible to volatile prices just from a few words from Washington.
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