If the United States restricts diesel exports, it could become another major shock to the global tanker market this year, according to an analysis. Since the US currently supplies nearly one-fifth of the world's seaborne diesel, any US government restriction or even temporary ban on diesel exports would quickly transmit its effects from the refined products market to the tanker shipping market. However, the impact would vary across different vessel types: MR product tankers in the Atlantic Basin could come under pressure first, while LR product tankers handling long-haul routes to Asia and the Middle East could benefit; at the same time, lower US refinery runs and rising Asian diesel margins could further support VLCC, Suezmax, and Aframax crude tankers.

US diesel exports now account for nearly one-fifth of global seaborne trade

So far this year, US seaborne diesel and diesel-type product exports have averaged 1.4 million barrels per day, an increase of about 255,000 bpd, or 22%, compared with the full-year 2025 average. US diesel now accounts for 18% of global seaborne diesel trade, up from 14% in 2025. This rising share is linked to reduced supply from the Middle East Gulf and Russia, with US exports partially filling the gap left by those regions. In terms of vessel types, US diesel exports are highly dependent on MR2 product tankers. This year, 88% of US diesel exports have been carried by MR2s, with LR2s accounting for 5%, and LR1s and MR1s each at 2%. In terms of destinations, 62% of US diesel exports go to South America, Central America, and the Caribbean, 24% to Europe, and 9% to Africa. After the Hormuz Strait crisis, US diesel supply to Europe and Africa grew particularly noticeably, with exports to Europe rising by about 104,000 bpd and to Africa by about 91,000 bpd compared with 2025. This means that if the US suddenly restricts roughly 1.4 million bpd of diesel exports, the impact would extend beyond US refineries to the entire Atlantic diesel trading system.

MR2s bear the brunt first, but global product tanker demand may not fall in tandem

The most direct shipping impact would be felt in the Atlantic Basin MR2 market. A large number of MR2s currently rely on US diesel export cargoes to sustain operations. If an export ban takes effect, the market could briefly see freight rates rise as cargo owners rush to ship before the policy formally kicks in; but afterward, with fewer US export cargoes, MR2 transport demand would decline noticeably. However, the amount by which US exports fall does not equal the amount by which global product tanker demand would fall. The real question determining the market's direction is whether Europe and Latin America can secure enough diesel from other regions, and how far alternative diesel would need to be transported. If US supply is replaced by diesel from the Middle East, the Far East, or South Asia, the short-haul voyages from the US Gulf to Europe and Latin America could transform into long-haul routes from Asia or the Middle East to the Atlantic market. This would directly increase ton-miles and would be especially favorable for large product tankers such as LR2s. Fearnley Securities believes that a US ban would initially be bearish for Atlantic MR freight rates, but as Europe and South America increase diesel purchases from the Middle East Gulf or the Far East, LR2 demand could rise. Even if replacement volumes do not fully offset the US supply gap, as long as transport distances lengthen significantly, tanker demand could still be supported. Clarksons Securities also points out that replacement diesel typically needs to be transported over longer distances. For example, alternative cargoes originating from Asia could have voyages more than twice as long as US cargoes. If China, South Korea, and India could fill about 700,000 bpd of the US supply gap, the ton-mile losses from reduced US exports could be almost entirely offset. Therefore, the US Gulf MR market could come under significant pressure, but the blow to the global product tanker market could be far smaller than the decline in US export volumes itself.

Whether Asia can fill the gap is key for the product tanker market

This logic holds only if the market can find enough replacement diesel. At present, that is not certain. Signal Ocean freight analyst George Sakellariou believes that if the US restricts exports, diesel crack spreads outside the US would likely surge, but there are currently not many regions that can actually increase exports, with the main potential sources being China and India. The problem is that even if international diesel prices rise, whether China and India are willing to significantly expand exports remains uncertain, as both countries may continue to prioritize domestic supply and maintain existing export policies. Therefore, there are two possibilities for the product tanker market. If Asia substantially increases exports, the diesel reduced by the US could re-enter European and Latin American markets through longer-distance transportation, benefiting LR2s and other long-haul vessel types. But if Asia cannot provide enough replacement supply, the total volume of global seaborne diesel would genuinely decline, and the impact on Atlantic MRs would become more pronounced. Europe could also ease supply pressure by releasing strategic petroleum reserves. If Europe draws on more inventories, some Asian diesel might no longer flow to Europe but instead divert to Latin America, further altering existing diesel trade routes.

US domestic market could also see transport mismatches

Restricting diesel exports could also backfire on the US itself. The US West Coast can basically meet local diesel demand, but the East Coast lacks sufficient refining capacity and still needs to import diesel from other regions. This year, the US has imported an average of about 160,000 bpd of diesel, with 85% going to the US East Coast, and 88% of those East Coast diesel imports coming from Canada. The problem is especially acute in New England. US domestic diesel pipelines do not extend all the way to the Northeast, so part of the local supply depends on seaborne transport. If US export restrictions drive up global diesel prices, Canadian diesel prices could also rise, increasing import costs for the US Northeast. In that case, the US could face greater domestic pressure to ship more diesel produced at Gulf Coast refineries to the East Coast via coastal shipping. If the government accordingly relaxes Jones Act restrictions, some MR tankers that lose international cargoes could also gain US domestic transport business.

For crude tankers, the impact could be the opposite

Unlike MR product tankers, US diesel export restrictions could generally be bullish for the crude tanker market. The first transmission channel comes from Asian refining profits. VLCC freight rates are already at extremely high levels. The Baltic Exchange's West Africa-to-China VLCC route earnings once reached $509,000 per day, only slightly below the previous record high. During geopolitical crises, how high VLCC rates can rise is largely limited by refining profits. If Asian diesel prices rise faster than crude prices after US diesel exits the market, diesel crack spreads would widen further. The higher refinery profits are, the more able refiners are to bear more expensive crude shipping costs, effectively raising the ceiling that VLCC freight rates can sustain. Therefore, although the US would be restricting diesel exports, one result could actually be that Asian refiners are able to pay higher crude transport costs.

Lower US refinery runs could also increase crude exports

The second transmission channel comes from US refineries themselves. US refineries have maintained high utilization rates above 90% this year to take advantage of current high refining margins, while postponing some equipment maintenance. But the US does not actually lack diesel. US Energy Information Administration data show that US diesel consumption has averaged about 3.8 million bpd this year. If about 1.4 million bpd of exports were restricted, the amount of diesel US refineries need to produce could fall by about 27%. With domestic diesel prices suppressed, some US refineries might reduce crude processing or use the opportunity to carry out previously deferred equipment maintenance. As refinery processing demand falls, US domestic crude demand would also decrease, releasing more WTI into the export market while putting pressure on WTI prices. More US crude entering international markets would increase transatlantic crude transport demand, supporting Suezmax and Aframax tankers.

Aframax tankers could receive a double boost

The impact on Aframax tankers is more complex. Since the Hormuz Strait crisis, because crude transport has been more profitable, many coated tankers previously engaged in LR2 product transport have shifted into the Aframax crude transport market. If the US restricts diesel exports, demand for long-haul diesel transport from Asia to Europe and Latin America would increase, and LR2 freight rates could rise accordingly. Some vessels that had shifted to crude transport might return to the LR2 product trade. This means available capacity in the Aframax crude tanker market would actually shrink. At the same time, if US refineries reduce runs and US crude exports increase, that would bring more Aframax crude cargoes. In other words, Aframax tankers could receive support from two sides at once: cargo growth from higher US crude exports, and capacity contraction as some vessels switch back to the LR2 market. However, this bullish case is not without offsetting factors. Currently, large volumes of US crude imports from Venezuela, Canada, and Mexico are also carried by Aframax tankers. If US refineries process less crude because of lower diesel demand, demand for imported crude could also fall, reducing some Aframax cargoes. Therefore, the ultimate impact of US diesel export restrictions on Aframax tankers will depend on the balance among three forces: higher US crude exports, LR2 vessels withdrawing from the crude market, and lower US crude imports. Overall, the core judgment is not that US diesel export restrictions would simply push tanker freight rates higher or lower, but that they could redistribute global diesel and crude trade routes and thereby cause clear freight-rate divergence across different vessel types.