WASHINGTON/BRUSSELS/PARIS, Oct 1 (Reuters) - The Trump administration has told Germany and France to draw down emergency diesel inventories to help ease soaring global fuel prices or face a potential US diesel export ban, according to three people close to the discussions.
The warning marks an escalation in pressure on Europe as US President Donald Trump considers a potential ban to help bring down US fuel prices ahead of November’s midterm elections.
How come? My guess would be if the US producers of oil can’t sell abroad, they’d have to sell domestically, which would increase the supply, which would drive down the price (basic supply and demand).
Oil prices are set globally, which is why if the UK for instance opened a new oil field it wouldn’t lower prices in the UK (Despite what right wing press are saying regarding Rosebank and Jackdaw), but if you’re cut off from the global markets, won’t it have an impact?
My ban, the proposed ban concerns diesel fuel, not crude. That said though, it makes absolutely no sense for companies to sell diesel far below market value during a global oil crisis.
If companiea can’t export diesel at a reasonable price then the first action would not to be to cut prices domestically, but to try and cut production. Which then also impacts gasoline and kerosine prices.