G7 agrees on release of diesel, oil stocks after US pressure

The Group of Seven (G7) nations reached an agreement on Friday to release 100 million barrels of diesel and crude oil from emergency reserves, according to a joint statement. The move was welcomed by US President Donald Trump, who is seeking assistance to alleviate surging fuel prices connected to the Iran war.

The decision came after the conflict triggered the largest emergency stock release in history in March, orchestrated by the International Energy Agency (IEA). In a statement, the G7 mentioned that they would carry out their commitments through a coordinated release by the IEA, specifically targeting a release of 100 million barrels. The release is projected to span four months, with the initial diesel release set to happen within 20 days by G7 members and partners.

While the G7 statement did not specify the distribution of crude, diesel, and other products, it did mention that they would convene in the context of the IEA in the coming days to discuss potential additional diesel releases as needed. The statement also highlighted that Europe had just agreed to release a significant amount of its heavily stocked diesel oil.

US President Trump, eager to reduce domestic fuel prices ahead of the November 3 midterm elections, had instructed Germany and France to reduce emergency diesel inventories or face a potential US diesel export ban, as reported by Reuters on Thursday. In response, the G7 emphasized that member countries would refrain from imposing export restrictions on energy products among themselves.

The G7's announcement served as a political statement rather than a binding commitment, as per analysts at Energy Aspects. The 100 million barrels release would represent a substantial portion of the EU's emergency stocks of diesel and gas oil, accounting for around 17% of the bloc's total emergency stocks or approximately 3% of the EU's annual consumption. As reported by LSEG data, US diesel futures saw a decline after news of the stock release discussions, falling by more than 4% to USD4.4491 per gallon.