Leaders of G۷ nations are to release up to ۱۰۰m barrels of their emergency diesel and crude oil stockpiles after Donald Trump threatened to cut off supplies of US diesel.
The French President, Emmanuel Macron, said ministers from some of world’s largest economies had agreed to release stocks from their strategic oil reserves after crisis talks on Friday.
Macron convened the leaders’ video call to discuss the global surge in diesel prices, and Trump’s threat to cut off US diesel exports unless Europe tapped their own stockpiles to help cool global markets.
Under proposals reportedly drawn up by Macron, the current G۷ chair, members will release ۵۰m barrels of diesel and ۵۰m of crude oil into the global market to ease prices.
The agreement suggests European countries will avoid being cut off from vital supplies of US diesel after coming under pressure from the White House in recent days to release their emergency supplies or face a US diesel export ban.
Trump said he was considering a ban on diesel exports after the surge in sales to overseas buyers pushed US diesel prices to record highs in a blow to the economy before the US midterm elections in November.
Macron said G۷ nations – which also includes the US, UK, Germany, Italy, Canada and Japan – wanted to “work in a coordinated manner to help bring down the prices of petroleum products, particularly diesel”.
He added that the G۷ members and partners would front-load a substantial diesel release within the first ۲۰ days and that ministers would discuss the “possibility of additional diesel releases as necessary” in the coming days.
“We have all committed together to releasing these strategic reserves in the proportions I mentioned, with a focus on diesel, and we are all committed to ensuring there are no export bans, and President Trump, in particular, was very clear on this point,” Macron said.
Trump said in a post on his Truth Social platform that Europe had “agreed to release a massive amount of their heavily stocked Diesel Oil” and that the process would start “immediately”.
The threat of a US export ban presented a considerable challenge for Europe, which produces about ۷۰% of the diesel it consumes from domestic refineries but relies on imports to make up the shortfall.
The ongoing disruption to fossil fuel exports from the Middle East has limited output from the region’s refineries as well as those in China, which is a leading buyer of Gulf crude. Meanwhile, Russian refineries have come under attack from Ukraine, causing its fuel output to fall to ۲۰-year lows.
In response, the US exported a record high of ۱.۹m barrels a week to overseas buyers in early August as the slump in global refining squeezed supplies across Europe and Asia.
The record exports caused the US’s own distillate stockpiles to fall to their lowest seasonal levels since ۱۹۹۶, causing diesel pump prices to climb above $۵.۸۵ a gallon (£۱.۱۸ a litre) for the first time in early September.
The proposed ban on US exports was expected to fuel greater competition for cargoes on the global market which would push prices in the UK and Europe well beyond current record levels.
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In the UK, the average price of diesel at the pumps climbed to a record high of £۲ a litre on forecourts on Friday, putting more pressure on motorists and the wider economy.
The cost of filling up an average family car is now £۱۱۰, according to the RAC motoring group, nearly £۳۲ more than before the Iran war. UK lorries, vans and farming vehicles are also typically diesel-fuelled, meaning the price rises will be felt in the higher cost of goods across the economy.
Brent crude oil was trading at just above $۱۰۰ (£۷۶) a barrel on Friday, compared with about $۷۲ before the Iran war started. It fell to about $۹۸ a barrel after news of the emergency stockpile release before returning to more than $۱۰۲ a barrel by the end of the day.
Macquarie Group’s Walt Chancellor said Europe’s decision to rely more on its own emergency reserves than US imports would not address the underlying problem in the US or the global market.
“The core issue the US faces is not a diesel problem. Nor is it a refined product problem. It may not even be a petroleum problem. It is a global energy problem,” he said, according to CNBC.
“So what is the solution then? In short, more oil through the strait of Hormuz and out of the Middle East. Anything short of that is really just shuffling deck chairs,” he added.
The IEA, the world’s energy watchdog, ordered the largest release of government oil reserves in its history in March when it agreed to release ۴۰۰m barrels of emergency crude, to help calm the oil price shock sparked by the US-Israeli attacks on Iran.
The intervention represented a third of the group’s total government stockpiles and was more than double the release of ۱۸۲m barrels of oil made in ۲۰۲۲ after Russia’s invasion of Ukraine.
