The world’s wealthiest countries announced Friday that they would release 100 million barrels of diesel, gasoline and crude oil from 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 follows Trump administration threats that the U.S. would ban exports of its diesel fuel. Such a ban threatened to create chaos in global markets and send costs surging further in Europe, where motorists and businesses are already struggling with expensive fuel.
Europe was faced with the choice of dipping into its reserves or dealing with the fallout of a U.S. export ban.
The total release amounts to one day of global oil demand. But the G-7 agreement involves a “frontloaded substantial diesel release within the first 20 days.”
That could ease prices some, but it was not immediately clear by how much. Some 28 million barrels of diesel are consumed around the world every day. The addition of a few dozen barrels of the fuel over four months creates a 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,” Trump posted on social media Friday morning. “The process will begin immediately.”
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 high 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, and the damaged refining infrastructure in the Middle East and Russia has put the system under severe strain.
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