Europe set to release 42 million barrels of oil for 'short term relief'

Europe plans to release 42 million barrels of oil reserves over the next three months in an effort to ease oil prices. France’s economy minister Roland Lescure announced this on Thursday ahead of a meeting of EU energy ministers in Luxembourg. Half of the release will consist of diesel fuel. The Group of Seven nations agreed to release up to 100 million barrels in total during a coordination with the International Energy Agency (IEA) in March.

Lescure stated that France’s 10 million-barrel diesel release, announced last month, will hit the market in the coming days, with price impacts expected to be felt as soon as next week. These reserves will be supplied at cost price, which will lower prices by 12 cents to 18 cents per liter, according to Lescure. This is considered short-term relief, as Lescure acknowledged that the crisis may resolve on its own gradually or require further action.

France is also negotiating a multilateral agreement to lower insurance prices for ships passing through the Strait of Hormuz, which has been under an Iranian blockade since the US and Israel conducted strikes earlier this year. The minister expressed concern over the ongoing crisis, emphasizing the need for diplomatic solutions.

Meanwhile, France is preparing for the winter and has encouraged fuel distributors to begin advertising reduced prices from November 1. Small distributors in remote areas will receive zero-interest loans. During his recent tour of five Gulf countries led by French President Emmanuel Macron, Lescure secured a deal for 300,000 tonnes of diesel per month with Saudi Arabia, Kuwait, the UAE, and Bahrain.

However, the impact on fuel prices at the pump remains uncertain due to fluctuating international market prices. A pledge by Qatar to sell liquefied natural gas (LNG) to France also depends on Qatar's ability to navigate the Strait of Hormuz, its sole export route.