G7 Agrees To Release 100 Million Barrels Of Oil And Diesel Reserves As Fuel Prices Surge

G7 countries have agreed to release up to 100 million barrels of oil and diesel from strategic reserves over four months to ease soaring energy prices. A substantial amount of diesel will be released within the first 20 days, with the IEA coordinating the programme. The decision follows growing pressure from the United States over rising diesel prices and supply disruptions linked to the war involving Iran and restrictions on shipping through the Strait of Hormuz.

The Group of Seven (G7) countries have agreed to release up to 100 million barrels of oil and diesel from strategic reserves in an effort to ease soaring fuel prices and address growing concerns about global energy supplies.
The agreement was reached on Friday following a virtual meeting chaired by French President Emmanuel Macron, who currently holds the G7 presidency. The emergency measure will be coordinated through the International Energy Agency (IEA) and implemented over a four-month period.
The G7 said a substantial quantity of diesel would be released during the first 20 days of the programme, bringing additional supplies to markets at a time when diesel prices have reached record levels in several countries.
The move comes amid major disruptions to global energy markets linked to the ongoing war involving the United States, Israel and Iran, as well as restrictions affecting shipping through the strategically important Strait of Hormuz.

DIESEL RELEASE TO BEGIN IMMEDIATELY

Under the agreement, G7 members and their partners will coordinate the release of strategic petroleum stocks through the IEA.
The first phase will focus heavily on diesel because supplies of the fuel have become particularly tight. Diesel is essential to transportation, agriculture, construction, manufacturing and the movement of food and other goods, meaning prolonged shortages can affect much more than motorists.
The G7 also said its members would coordinate refinery maintenance schedules and increase refinery utilisation where possible in an effort to raise production of refined fuels.
The group said it would also avoid imposing restrictions on energy and petroleum-product exports between G7 countries, a commitment intended to prevent further disruptions to fuel supplies.

TRUMP WELCOMES EUROPEAN FUEL RELEASE

The announcement came shortly after US President Donald Trump said European countries had agreed to release a large quantity of diesel from their reserves.
Trump had been pressing European governments, particularly Germany and France, to make more fuel available as prices rose.
His administration had also threatened to restrict US diesel exports if European countries failed to release their stockpiles. The G7 agreement has now brought the major economies together around a coordinated release instead.
The G7's official statement said the countries would meet again through the IEA in the coming days to consider whether additional diesel releases would be necessary.

STRAIT OF HORMUZ DISRUPTION ADDS TO ENERGY PRESSURE

One of the major factors behind the current energy crisis is disruption to shipping through the Strait of Hormuz, a vital route for international oil and gas supplies.
Restrictions on shipping through the waterway have reduced the movement of energy products and increased uncertainty in global markets.
The consequences have been felt far beyond the immediate conflict zone. Higher crude oil prices feed into the cost of refined products such as diesel, while transport companies and other businesses face increased operating expenses.
The G7 said restoring safe navigation through the Strait of Hormuz was important for international trade and energy security.

US DIESEL PRICES REACH RECORD LEVELS

The United States has been particularly affected by the rise in diesel prices.
The national average for diesel reached $6.37 per gallon on Friday, according to the American Automobile Association. The price had previously reached a record $6.52 per gallon on September 22.
US diesel inventories have also fallen sharply. Data for September 11 showed distillate stocks, which include diesel and heating oil, at about 107.9 million barrels, adding to concerns about the availability of supplies as demand remains high.
Diesel is particularly important to the US economy because heavy trucks, agricultural machinery, construction equipment and many industrial operations depend on it.
When diesel becomes more expensive, businesses generally face higher transportation and production costs. Those costs can eventually be passed on to consumers through higher prices for food, goods and services.

EUROPE HOLDS LARGE EMERGENCY STOCKPILES

European countries maintain significant emergency fuel reserves because of their dependence on imported energy.
According to the figures cited in the report, EU countries and the United Kingdom together hold about 52 million tonnes of gas, oil and diesel stocks, including almost 38 million tonnes of emergency reserves held by EU countries.
EU rules require member states to maintain emergency oil stocks equivalent to at least 90 days of net imports or 61 days of domestic consumption, whichever is greater.
These reserves are intended to provide a buffer when normal supplies are disrupted by wars, natural disasters, transport problems or other major emergencies.
The current G7 agreement means some of those reserves will now be brought into the market to help address the immediate shortage.

THREAT OF US DIESEL EXPORT BAN RAISED CONCERNS

Before the G7 agreement, Trump had raised the possibility of banning US diesel exports in an attempt to increase domestic supplies and reduce prices.
The proposal created concern in Europe because several European countries rely on imported diesel to supplement domestic production.
The European Union rejected the threat earlier on Friday, arguing against measures that could further disrupt international fuel markets.
A US export restriction could also have affected other countries that depend on American refined fuel supplies, potentially increasing competition for diesel from alternative suppliers.
The G7's decision to release reserves and maintain energy trade between members has therefore reduced the immediate prospect of a major restriction on diesel exports among the participating countries.

G7 PREVIOUSLY RELEASED LARGE EMERGENCY STOCKS

The latest announcement comes several months after IEA member countries agreed in March to release 400 million barrels of oil from emergency reserves.
That earlier release was designed to respond to a separate period of severe disruption in global oil markets.
Officials have said the March commitment has not yet been fully completed, meaning the latest G7 measure will have to be coordinated with existing reserve-release plans.
The IEA will monitor implementation and the effect of the new release on energy markets.

WILL THE RELEASE LOWER FUEL PRICES?

The G7 hopes that putting additional oil and diesel into the market will increase available supplies and reduce some of the pressure pushing prices higher.
However, the impact will depend on how quickly individual countries release their reserves, how much of the stock consists of crude oil rather than finished diesel, and how quickly refineries can process additional crude.
Diesel supplies can reach consumers more quickly when finished fuel is released directly from storage. Crude oil, by contrast, must first be transported to a refinery and processed before it becomes usable diesel.
The G7 has therefore placed particular emphasis on releasing a substantial amount of diesel during the first 20 days.
The IEA will monitor the implementation of the programme and assess whether additional action is required.
For households and businesses facing higher fuel costs, the central question will be whether the additional supplies can translate into sustained lower prices rather than only temporary relief.