G-7 countries agree on release of diesel and oil stocks after US pressure

US President Donald Trump is seeking to lower domestic fuel prices - triggered by the US’ war in Iran - ahead of Nov 3 midterm elections.

BRUSSELS - Group of Seven (G-7) countries agreed on Oct 2 on the release 100 million barrels of diesel and crude oil from emergency reserves, in a move cheered by US President Donald Trump as he seeks help to cool off surging fuel prices linked to the Iran war.

The conflict sparked the biggest emergency stocks release in history in March coordinated by the International Energy Agency.

“Taking into account commitments that have already been fulfilled, we will implement our commitments with a coordinated release through the IEA of 100 million barrels,” the G-7 said, in a joint statement.

It said it would begin immediately and last four months with a frontloaded substantial diesel release within 20 days by G-7 members and partners.

It did not provide a breakdown for the volumes of crude, diesel and other products to be released nor state which countries would participate.

“We will convene in the context of the IEA in the coming days to discuss the possibility of additional diesel releases as necessary,” the statement added.

“Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil. The process will begin immediately,” Trump wrote in a post on Truth Social on Oct 2.

The US president is seeking to lower domestic fuel prices ahead of Nov 3 midterm elections.

The Trump administration had told Germany and France to draw down emergency diesel inventories or face a potential US diesel export ban, Reuters reported on Oct 1 citing three people close to the discussions.

The G-7 statement said member countries would refrain from imposing export restrictions on energy products between themselves.

“This is a political statement rather than a specific and binding commitment with the large headline number intended to persuade President Trump not to impose a diesel export ban,” analysts at Energy Aspects said in a note.

Europe has boosted its imports of US diesel this year due to disrupted supply from Gulf producers due to the Iran war.

EU governments on Oct 2 had discussed a proposal by France for European countries to release 50 million barrels of diesel, and for IEA members to release 50 million barrels of crude oil, three sources familiar with the discussions told Reuters.

A 50-million-barrel release of diesel would equate to approximately 17% of the EU’s total emergency stocks of diesel and gasoil, Eurostat data showed, or about 3% of the bloc’s annual consumption.

US diesel futures fell after reports of the stock release discussions, and were down more than 4% to US$4.4491 a gallon. Benchmark European diesel futures fell by more than US$90 per metric tonne, LSEG data showed.

The March release coordinated by the 32-member IEA involved 400 million barrels of strategic reserves.

IEA executive director Fatih Birol said this week that members had released about two-thirds of those volumes. REUTERS