TD Cowen sees diesel export quota as possible policy move

Investing.com - TD Cowen said a diesel export quota appears more likely than an outright ban on oil or product exports, though the firm views any export controls as unlikely in the near term. The research firm said investor focus has centered on potential diesel export restrictions as diesel prices reach record levels heading into the November 3, 2026 midterm elections.

The firm said a diesel export quota could push diesel prices down by approximately $16 per barrel and margins down by $11 per barrel if structured as a two-month restriction. TD Cowen analyst Jason Gabelman said prices could decline further as inventories build, with a floor potentially set at gasoline prices as refiners would shift production away from diesel. Spot diesel prices currently trade $60 per barrel above gasoline while fiscal year 2027 prices are $40 per barrel above gasoline.

PBF Energy (NYSE: PBF) and Delek US Holdings (NYSE: DK) could face the most downside among U.S. refiners given their large mainland presence, while Par Pacific Holdings (NYSE: PARR) and Phillips 66 (NYSE: PSX) could see more limited impact, TD Cowen said. Among international oil companies, BP could face the largest headwinds from its U.S. refinery footprint while TotalEnergies (NYSE: TTE) could see a net benefit.

The U.S. currently imports approximately 180,000 barrels per day of diesel, mostly to the East Coast, and exports 1.6 million barrels per day, which is 300,000 barrels per day higher than historical levels. A quota set roughly 200,000 barrels per day below current export levels could eliminate the need for U.S. diesel imports and disconnect domestic prices from global markets, the firm said.

TD Cowen Washington Research Group analyst John Miller said the Trump Administration's policy approach remains biased toward increasing supply through measures including Strategic Petroleum Reserve exchanges, Jones Act waivers, environmental exemptions, and Defense Production Act funding for refinery expansion. The firm said any export control action would most likely be time-limited to deliver political coverage while attempting to limit market distortions.

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