G7 to release 100 million barrels of oil to combat soaring fuel prices

The Group of Seven industrial nations plan to release 100 million barrels of oil and fuel products in the coming weeks, starting with “substantial” amounts of diesel after the fuel recently hit record high prices in the United States.

US President Donald Trump said the diesel release would happen “immediately,” echoing a G7 promise to start “immediately” with a “front-loaded substantial release” of diesel within the next 20 days and the rest over four months.

French President Emmanuel Macron and US President Donald Trump, pictured at the G7 summit in June, spoke on the phone before the meeting was convened.GettyTrump and his Republican Party face pressure to address surging prices ahead of the November 3 midterm elections. The president’s approval ratings on the economy hit a new low, according to an AP-NORC poll, as the Iran war and his trade battles have increased US prices for oil and other goods.

Gas prices in the US and abroad have soared during the eight-month-long war, a cost Trump has repeatedly said is worth it for making sure Iran does not obtain nuclear weapons. The national average for a gallon of diesel in the US was $US6.37 on Friday, according to AAA, after hitting a record $US6.52 on September 22.

In Australia, petrol and diesel prices climbed to their highest average levels since April. Regular unleaded averaged $2.37 a litre at service stations nationwide in the week to Monday, September 28, up 10¢ a litre from the week earlier, according to figures from the Australian Institute of Petroleum. Diesel rose even more sharply, increasing nearly 14¢ to $2.87 a litre.

France holds the rotating presidency of the G7 group and made the announcement in a statement released after video-conference talks that Macron presided over. The G7 countries are Canada, France, Germany, Italy, Japan, the UK and the US, plus European Union (EU) representation.

The release follows on from a March announcement that International Energy Agency member countries would release 426 million barrels of oil and products to stabilise the oil market. EU countries committed about 92 million barrels, a promise weighted toward refined products made from crude such as diesel.

“This common decision and this unity should bring down prices,” Macron said. “The volumes we’re releasing should also add liquidity to the market and bring down prices.”

In addition to the rise in the price of the crude oil from which diesel is made, other factors include the decision by Russia to ban exports due to Ukrainian drone strikes on its refineries. Europe does not import Russian diesel, but other buyers of Russian diesel such as Turkey and Latin American countries must now compete with Europe for available barrels.

Meanwhile, refined product shipments from the Persian Gulf producers have fallen due to war damage and blocked export routes.

Some Republicans in the US had called for Trump to ban US exports of diesel to try to bring domestic prices down. But the G7 statement said the group, which includes the United States, also agreed not to limit energy exports to each other.

Oil market analysts warn a US export ban could lower prices in the short term but eventually backfire by reducing supplies of gasoline since diesel output can’t be lowered without also cutting overall refinery production.

Trump had a conversation overnight with Macron about the need to address rising fuel prices and the availability of petroleum products, according to the French Embassy in the US. Macron on Friday then chaired the videoconference of G7 leaders to discuss the issue.

Besides his call with Macron, Trump on Friday called in to the meeting with the G7 leaders to negotiate the release of the European diesel stockpiles, according to a White House official who was not authorised to speak publicly and spoke on the condition of anonymity.

Trump on Thursday embarked on what he said would be a 32-day marathon of rallies to try to bolster his party’s chances for keeping control of the US House and Senate in the November elections. The president has grown increasingly frustrated with what he sees as a disconnect between his achievements and the public’s view of his work. This week he gave himself an A-plus for his work on the economy but said “we’re doing an extremely poor job of promotion”.

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