Oil prices fell sharply on Friday after G7 leaders agreed to release up to 100 million barrels of petroleum reserves—including diesel and crude oil—within four months to address global fuel shortages. The decision follows coordinated discussions among European Union nations and pressure from the United States to stabilize energy markets.
G7 leaders finalize coordinated stock release plan
The G7 nations, including the United States, France, and other major economies, announced the coordinated release of strategic reserves in a joint statement following a virtual meeting hosted by French President Emmanuel Macron. The plan includes a substantial diesel release within the first 20 days, with the total volume reaching up to 100 million barrels over four months. Macron stated that the group agreed to “take no measures to restrict the exchange of energy and petroleum products between partner countries.”
The move comes as global diesel prices surged, driven by reduced refinery capacity in the Middle East and Russia, as well as heightened demand. Brent crude futures fell 2.77% to $99.48 per barrel, while West Texas Intermediate dropped 3.61% to $89.52 per barrel in early trading. European gasoil futures, a benchmark for diesel prices, also declined more than 5% to $1,377 per metric ton.
European proposals and U.S. pressure shape the response
EU countries discussed a French proposal to release 50 million barrels of diesel, alongside a potential 50 million-barrel release of crude oil by International Energy Agency members. The discussions followed calls from U.S. Treasury Secretary Scott Bessent, who urged European allies to accelerate deliveries of existing commitments and make additional supplies immediately available. Bessent emphasized that American farmers, truckers, and businesses should not bear the burden of a global diesel shortage.
In parallel, reports indicated that Chinese refiners suspended oil product exports for October to preserve domestic stocks, further tightening global supply. Meanwhile, the U.S. has considered imposing a diesel export ban, which could disproportionately affect European and UK markets.
Market reactions and long-term implications
Analysts noted that while crude availability has improved due to recovering flows from the Middle East, the primary stress in energy markets now lies in refined product supply. Ole Hansen, head of commodity strategy at Saxo Bank, highlighted that the focus has shifted from crude oil to diesel and other refined fuels, constrained by reduced refinery capacity and output.
The G7’s decision to release reserves marks the latest in a series of coordinated efforts to cap soaring fuel prices, following a 400 million-barrel crude oil release by IEA members in March. Despite these measures, oil prices remain elevated, with Brent crude still above $100 per barrel and up more than 60% since the start of the year.
The coordinated stock release is expected to provide temporary relief to diesel markets, though analysts caution that structural challenges in refining capacity may limit the long-term impact on prices.