The world’s wealthiest countries announced Friday that they would release 100 million barrels of diesel, gasoline and crude oil from their emergency reserves over the next four months, in an effort to ease crushing prices around the world.
The move by the Group of 7 nations followed Trump administration threats that the United States would ban exports of its diesel fuel. Such a ban threatened to create chaos in global markets and send costs surging further, especially in Europe, where motorists and businesses are already struggling with expensive fuel.
Europe faced the choice of dipping into its reserves or dealing with the fallout of a U.S. export ban.
As part of Friday’s agreement, the diesel that will flow into the market will come from European stocks. The deal involves a “front-loaded substantial diesel release within the first 20 days.”
That could ease prices some. Diesel and oil futures dipped on news of the announcement. But it was not immediately clear how much relief drivers would see.
About 28 million barrels of diesel are consumed around the world every day. The addition of a few dozen million barrels of the fuel over four months creates only a measured increase in the global supply.
“This is a short-term bandage for a wound that is still wide open,” said Brett Erickson, a risk advisory consultant who closely monitors oil and gas markets.
President Donald Trump framed the release as a victory for the U.S. “Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil,” he posted Friday morning on social media. “The process will begin immediately.”
The announcement suggests the release of the fuel reserves was conditional on the U.S. agreeing not to pursue a diesel ban.
“We are all committed to ensuring there are no export bans, and President Trump, in particular, was very clear on this point,” said French President Emmanuel Macron, speaking to reporters.
Before the announcement, European Commission spokeswoman Anna-Kaisa Itkonen told reporters in Brussels that the European Union “fully rejects” the U.S. threat of a ban on diesel exports. “A ban would not be beneficial to anyone,” she said. “It would undermine our trust in the United States as a reliable partner.”
As the Trump administration contemplated an export ban in recent weeks, top executives from the country’s largest oil companies aggressively lobbied the White House against it, according to industry officials. They warned a ban could do the opposite of what the administration intended and send prices shooting upward domestically.
The executives pushed the administration to shift its focus toward Europe, where they said reserves in France, Germany and Italy could be used to ease prices.
Those stockpiles were discussed between U.S. Trade Representative Jamieson Greer and his European counterparts on the sidelines of the Group of 20 trade ministerial in Milwaukee this week.
“There’s an eagerness on both sides to work together to get more diesel to the market,” Greer told reporters during the meetings. “We just want to make sure that American workers and farmers are getting the diesel they need at a price that they can manage, and part of it is getting those supplies to market.”
But market analysts were cautious in their assessment of Friday’s agreement. They said it was unclear how much of the fuel Europe is releasing is part of a commitment it made months ago, when global leaders vowed to dip into reserves to address the energy crunch.
The impact on markets, Pavel Molchanov, an investment strategy analyst at Raymond James, said in an email, “was lessened by lack of clarity on an important question: will the 100 million be in addition to the 400 million already pledged by the [International Energy Agency’s] 32 members, or is this the final portion of the existing pledge?”
Republican lawmakers — many of them in tough election contests where soaring fuel costs are driving voter anger — praised the agreement.
“I applaud this announcement,” said a statement from Sen. Susan Collins (R-Maine). She said the release “will increase the supply of diesel, which can also be used to heat homes this winter, and crude oil, putting immediate downward pressure on energy prices and helping to lower the cost of producing and transporting goods.”
U.S. diesel prices hit record highs in September and on Friday averaged $6.37 per gallon nationwide. The high prices are the result of the wars in the Middle East and Eastern Europe, which have badly damaged refining infrastructure and disrupted fuel shipments.
The elevated prices have hit Republican voting districts in U.S. agricultural areas particularly hard, moving several politically vulnerable lawmakers to call on the White House to impose a diesel export ban.
The U.S. military has made considerable progress restoring the flow of crude oil through the Strait of Hormuz, where Iran has regularly attacked ships since the war began in late February. But the flow of diesel and gasoline through the strait remains a fraction of what it was before the war started, and the damage to the refining infrastructure in the Middle East and Russia has put the system under severe strain.
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