G7 to Release Up to 100 Million Barrels of Diesel, Crude Benoit Berthelot and John Ainger The Group of Seven nations and its partners plan to release as much as 100 million barrels of emergency oil and diesel stocks, capping a week of mounting pressure from the Trump administration to bring down soaring fuel prices. The release, coordinated by the International Energy Agency, will take place over the next four months, with an initial focus on diesel, French President Emmanuel Macron said on Friday. The move is intended to “send a clear signal to the markets,” he said.
European diesel prices and Brent crude futures slumped after the news. The announcement left key questions unanswered, with a G7 statement giving no breakdown of how much crude and diesel would be released or how much of the total represented new commitments rather than previously pledged supplies. The deal followed a US threat to restrict diesel exports unless European countries made more fuel available.
Such a move would threaten an essential source of supply for a continent heavily reliant on imports. Diesel is crucial for transportation, farming and industry, and prices have surged as the wars in Iran and Ukraine disrupt supplies. The soaring cost has become a political concern for President Donald Trump ahead of November’s US midterm elections.
The IEA already coordinated a 400 million-barrel reserve release in March soon after the Iran war broke out, but Trump has criticized Europe for not making those barrels available quickly enough. The pressure intensified this week, prompting emergency talks among European officials on Thursday as the European Union sought a coordinated response to Washington’s demands. About a third of the original release had yet to reach the market, IEA Executive Director Fatih Birol said Tuesday.
As of that day, Germany had yet to release about 77% of its pledged stocks, while Spain had made available only about a third of its commitment. The US, by contrast, approved another 40 million barrels from its Strategic Petroleum Reserve this week, completing its contribution to the March agreement. The latest release will include barrels pledged but not yet made available under the March agreement, according to people familiar with the matter.
The plan envisages a “substantial” release of diesel stocks within 20 days, while the IEA will discuss additional diesel releases if necessary, according to a G7 statement."We have all committed together to releasing these strategic reserves in the proportions I mentioned, with a focus on diesel," said Macron, the current chair of the G7. "We are all committed to ensuring there are no export bans, and President Trump, in particular, was very clear on this point."Trump said in a social media post on Friday that he welcomed the latest action."Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil," Trump said. "The process will begin immediately."At a meeting on Friday, EU ambassadors discussed backing the release on two conditions: that it wouldn’t jeopardize strategic reserves and that the US would commit to avoiding energy-export bans, according to a person familiar with the matter, who requested anonymity because the conversations are private. European diesel’s premium over crude oil, a closely watched measure of market strength, slumped as low as $69 a barrel, down from $76.77 on Thursday, fair-value data compiled by Bloomberg show. The prospect of additional diesel supplies has hit European refining margins particularly hard, with margins falling about 10%, compared with roughly 5% in the US, according to Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
Reduced European demand for imported diesel could also weigh on US exports and margins, while additional supplies may curb refiners’ demand for crude, she said."It can shift some US exports into other markets or back home," said Joe De Laura, global energy strategist at Rabobank. "It’s a short ter...
Source: Bloomberg Markets · Summarized by HeadlinesBriefing