Britain could see diesel shortages within a fortnight and prices at the pump soaring to all-time highs of £3 a litre if Donald Trump bans US exports, analysts have warned.
Prices could spike by at least 50 per cent from the current average litre cost of almost £2 if the US President curbs diesel exports, with panic-buying from drivers hitting dwindling supplies, experts said.
Trump is said to be considering a 90-day export ban before November’s mid-term elections, after diesel in the US hit a record average of $6.52 (£4.93) a gallon.
Britain now relies on the US for around 30 per cent of its diesel imports – up from less than 5 per cent before Russia’s 2022 invasion of Ukraine .
Five UK refineries have closed since 2000, including two last year, leaving Britain with four operational refineries – down from 18 in the 1970s – with the UK only now having around 42 days of emergency stockpiles.
Around 30 per cent of UK cars, 9.5 million, and almost all freight and farming vehicles, rely on diesel, with fears hikes in prices will get passed on to customers through the cost of everyday items.
Ashley Kelty, an analyst at investment bank Panmure Liberum, said if Trump did curb diesel exports there could be shortages at UK pumps within a couple of weeks.
He told The i Paper: “You would maybe see some localised shortages springing up before that, but it’ll really hurt the smaller hauliers and the like, who just won’t be able to fill their trucks.
“A lot of trucks would come off the road. You wouldn’t be able to fill them. We’d start seeing delays in goods being transported around the UK.
“I think you’d also see a lot of people then having to look at working from home because they wouldn’t be able to afford to travel because they’re filling their cars.”
Forecourt prices surging to £3 a litre “would not be a surprise” in the short term if Trump went ahead, he added.
Diesel has already risen by 55p (40 per cent) since February when the Iran war began, impacting supplies through the Strait of Hormuz.
James Noel-Beswick, head of commodities at Sparta Commodities in the Netherlands, said panic buying could also hit supplies
“We’ve seen it with petrol before that you have these kind of shortages of gasoline, for example, that people start hoarding, and then that causes short-term shortages,” he said. “I think that could happen.”
According to the RAC, the average price of diesel had soared to 197.75p a litre on Thursday, up from 142.38p before the start of the Iran war and close to the all time-high of 199.09 in June 2022 after Russia invaded Ukraine.
The cost of a 55-litre fill-up for a family car as now risen to £109, with the price of diesel set to skyrocket to its highest ever this weekend.
The price of diesel per litre has now climbed to almost £2 (Photo by Paul Ellis / AFP via Getty Images)But UK drivers could face even worse punishment at forecourts if Trump goes ahead with the threat to curb US exports.
“I just drove past the pump here, and diesel prices were up to like €2.80 per litre. I don’t think £3 [per litre] sounds outrageous,” Noel-Beswick added.
In this event, the Government would have to bring in measures to destroy demand to bring prices down, he added.
“But that’s quite a scary thing. Because that starts to affect the economy. And diesel is really the powerhouse of the economy,” he said, adding more imports may have to be brought in from Nigeriam refineries.
Analysts at Argus Media warned the UK is even more exposed now than in the past after two of the country’s last six refineries – Grangemouth and Lindsey – closed last year, with even a partial US ban cutting a big chunk of European supply.
“A US export ban would be devastating for diesel supply in Europe, which would struggle to replace supply,” said Josh Michalowski, head of European diesel pricing. “Competition is already intense with Asia-Pacific and Africa for supply from India and the Middle East.”
Thomas Pugh, chief economist at the audit, tax and consulting firm RSM UK, said the UK wouldn’t necessarily see a diesel shortage. “However, if the ban persisted for long enough shortages would become a real possibility,” he added.
Elizabeth de Jong, chief executive of Fuels Industry UK, said fears over curbs on US diesel exports showed again that Britain can’t solely rely on overseas production for domestic energy security.
“Without urgent protection against carbon and investment leakage, more UK refineries will close,” she said
The UK now imports 55 per cent of all its diesel, compared to 14 per cent in 2003, with the wider economy vulnerable to any shortfall in supply.
James Hitchman, director of Portland Pricing, warned: “Any sustained increase in price or restriction in supply would have consequences well beyond the forecourt, affecting haulage, farming, manufacturing and construction.”
In a letter to the Energy Secretary on Friday, shadow energy secretary Andrew Bowie also warned of “a real risk that supply shortages could rapidly feed through to businesses and consumers, with significant economic consequences”.
A Department for Energy Security and Net Zero spokesperson said: “We have a diverse and resilient supply. We continue to engage with our international partners and the UK fuel industry.”
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