The Group of Seven agreed Friday to release up to 100 million barrels of diesel and crude oil over four months, beginning immediately, as governments move to contain record fuel costs driven by disruptions from the Iran and Russia-Ukraine wars.

By yourNEWS Media Newsroom

Group of Seven governments agreed Friday to release up to 100 million barrels of diesel and crude oil from emergency reserves, launching an immediate international effort to increase fuel supplies after record diesel prices intensified pressure on consumers, businesses and governments.

The action will be coordinated through the International Energy Agency and spread across four months, with a substantial amount of diesel scheduled to reach markets during the first 20 days. The official G7 agreement also leaves open the possibility of further releases if prices and supplies fail to stabilize.

“Facing unprecedented volatility in oil markets—with surging prices threatening economic stability and the well-being of our citizens—we have agreed on decisive, coordinated measures to stabilize immediate energy supplies, shield households and businesses from price shocks, and strengthen the long-term resilience of global energy systems,” the G7 said in its Oct. 2 joint statement.

French President Emmanuel Macron, whose country holds the G7 presidency, convened leaders by video Friday after several days of increasingly urgent negotiations over diesel supplies. France said the group unanimously agreed to release strategic diesel and crude inventories, increase refinery output where possible and refrain from restricting energy trade among member countries. Macron’s office said the measures were intended to send a clear signal to energy markets and put downward pressure on prices.

The broader G7 statement said governments would coordinate refinery maintenance schedules to prevent large amounts of capacity from going offline simultaneously and would temporarily increase refinery utilization where feasible. Leaders also encouraged countries outside the G7 with substantial refining capacity to increase production of diesel and other refined products.

The group said it would “refrain from export restrictions on energy and energy products between G7 countries” and urged other producers to avoid bans that could further tighten international markets.

That provision is significant because President Donald Trump had publicly considered restricting U.S. diesel exports as prices climbed to record levels. European officials had warned such a move could worsen an already tight international market, particularly because Europe has increasingly relied on American refined fuel as supplies from Russia and the Middle East have been disrupted.

Trump welcomed the agreement shortly after the G7 meeting.

“Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil. The process will begin immediately,” the president said in a Truth Social post on Oct. 2.

The G7 agreement reported Friday did not specify exactly how the 100 million barrels would be divided between crude oil, diesel and other petroleum products or identify the precise contribution from each participating government. It said only that diesel releases would be front-loaded and that G7 countries and partners would participate.

The International Energy Agency is expected to monitor implementation and report back within 20 days. G7 governments also plan to meet again through the agency to determine whether additional diesel inventories should be released.

The action represents the second major coordinated drawdown of emergency oil reserves since the Iran conflict disrupted global energy markets earlier this year.

In March, the IEA’s 32 member countries agreed to release approximately 400 million barrels from strategic reserves, the largest emergency stock release in the agency’s history. IEA Executive Director Fatih Birol said this week that roughly two-thirds of those commitments had already been delivered. Reuters reported that Friday’s new action takes into account commitments already fulfilled under the earlier release.

The immediate problem has increasingly shifted from crude oil alone to diesel and other refined products.

Global diesel consumption is roughly 28 million to 30 million barrels per day, meaning even a large emergency release represents a relatively short-term buffer against sustained disruptions. The 100 million-barrel commitment also includes crude rather than consisting entirely of diesel, further limiting the amount of finished fuel being added directly to the market.

U.S. diesel prices illustrate the scale of the pressure. The national average reached approximately $6.52 per gallon in late September before beginning to retreat. By Friday, the average had declined to roughly $6.37 per gallon but remained dramatically above the $3.70 range recorded a year earlier. Current AAA pricing data show sharp regional differences, with diesel above $8 per gallon in California.

Diesel is especially consequential because its price affects far more than drivers of diesel-powered passenger vehicles. Commercial trucks, farm machinery, construction equipment, freight networks and numerous industrial operations depend heavily on the fuel, allowing sustained price increases to spread through supply chains and eventually affect the price of food and consumer goods.

The Trump administration had spent the days preceding the G7 meeting pushing European governments to release more of their emergency inventories.

“Our European partners should accelerate delivery on their existing commitments and make additional supplies immediately available to address ongoing disruptions,” Treasury Secretary Scott Bessent said a day earlier on X.

“American farmers, truckers, and businesses should not be left carrying the burden of a global diesel shortage. America is doing its part.”

Washington had focused particularly on Germany and France, both of which maintain sizable emergency stocks. The administration argued that coordinated international releases represented a more effective response than leaving the United States to absorb much of the economic pressure.

Energy Secretary Chris Wright had also cautioned against using an American export prohibition as the primary solution.

“We’re the largest diesel exporter in the world, but that same refinery that produces diesel also produces gasoline and jet fuel,” Wright said.

“So, if you can’t export the diesel that comes out of our refineries when you run out of places to store it, and you have to reduce U.S. refining, which would put upward pressure on gasoline prices and jet fuel prices.”

Wright’s argument reflects the structure of oil refining. A refinery cannot generally produce only diesel; crude oil is converted into a combination of gasoline, diesel, jet fuel and other products. If refiners lose the ability to sell one major product overseas and domestic storage fills, they may have to reduce overall refinery runs, potentially tightening supplies of other fuels.

Wright has publicly argued that a broad U.S. diesel export ban could therefore produce the opposite of its intended effect. Reuters reported his opposition as the administration considered options for bringing down domestic prices.

The G7 commitment to avoid energy export restrictions appears designed in part to prevent that outcome.

Two wars are contributing to the present squeeze.

The conflict involving the United States, Israel and Iran has disrupted flows through and around the Strait of Hormuz, one of the world’s most important petroleum corridors. Although Gulf oil exports have recently recovered substantially toward prewar volumes, shipping patterns remain altered and international refining and fuel-distribution networks continue operating under pressure.

The G7 statement condemned Iran’s attacks on neighboring countries and disruption of energy trade and called for “the immediate and full restoration of navigational rights and principles in the Strait of Hormuz.” Leaders also said they would continue efforts aimed at restoring unrestricted commercial traffic through the waterway.

The Russia-Ukraine war has simultaneously removed additional diesel from international markets.

Ukraine has repeatedly attacked Russian oil refineries, reducing processing capacity and contributing to shortages inside Russia. Moscow responded by restricting exports in an effort to preserve domestic supplies.

Russia extended its diesel export ban through Oct. 31 for producers after earlier restrictions failed to fully stabilize its domestic fuel market. Russia has historically been one of the world’s largest diesel exporters, making the reduction in its shipments particularly important to European and global supplies.

Deputy Prime Minister Alexander Novak said Friday that Russia could consider partially lifting the restriction if production begins exceeding domestic requirements, but no such change has yet been announced.

The combination of reduced Russian exports, instability around Hormuz and strains across the global refining system has created an unusually tight market for middle distillates such as diesel and heating oil.

International Energy Agency data show global oil inventories have already been heavily depleted during the conflict. The agency’s September Oil Market Report estimated observed worldwide petroleum inventories had fallen by 507 million barrels since the war began, an average draw of approximately 2.8 million barrels per day.

Those losses have left less room for the market to absorb additional interruptions.

The fuel shock is also contributing to renewed inflation pressure in the United States and Europe.

Higher diesel costs can initially appear in headline energy inflation before spreading into core prices as companies face higher freight, production and distribution expenses. Businesses must then choose whether to absorb those costs through lower profit margins or pass them to customers.

Beth Ann Bovino, chief U.S. economist at U.S. Bank and head of the American Bankers Association’s Economic Advisory Committee, said businesses appear to be testing how much additional cost consumers will tolerate.

“Businesses are kind of almost … testing the waters of what they can get through without losing the customer,” Bovino said during an American Bankers Association virtual event Sept. 23.

Those concerns have become significant enough to affect monetary policy.

The Federal Reserve raised its benchmark interest rate by a quarter percentage point in September to a range of 3.75% to 4%, its first increase since July 2023. The Federal Reserve’s official decision said inflation remained elevated while economic activity continued expanding at a solid pace.

The European Central Bank acted earlier in September, raising its three primary rates by 25 basis points. The ECB said the Middle East conflict was continuing to create inflationary pressure and could keep inflation above its 2% target for an extended period.

Central banks are particularly concerned about so-called second-round effects, in which an initial energy-price shock spreads into transportation charges, wages and the prices of other goods and services.

Financial markets reacted quickly to the G7 announcement.

U.S. diesel futures dropped more than 4% during Friday trading, while benchmark European diesel contracts fell by more than $90 per metric ton after reports of the coordinated release emerged. Reuters said the market reaction began even before the final G7 statement was published. Prices remained extremely elevated by historical standards despite the decline.

Crude oil also moved lower.

Brent crude, the international benchmark, fell below $100 per barrel later Friday, while U.S. West Texas Intermediate dropped toward $89. Market reporting showed both benchmarks retreating after the reserve-release agreement reduced immediate concerns about available supply.

Birol said oil prices began falling almost immediately after the announcement and that IEA countries retain enough emergency reserves to take additional action if necessary. He said the coordinated measure had produced roughly a $5 decline in prices at one point following the decision.

The G7 plan is nevertheless intended as emergency relief rather than a permanent solution.

Releasing strategic inventories moves existing fuel onto the commercial market but does not create new long-term refining capacity. Sustained improvement ultimately depends on restoring reliable shipping routes, increasing refinery output and normalizing supplies from major producing regions.

That is why Friday’s agreement includes measures extending beyond the physical release of reserves. Governments said they will coordinate refinery maintenance, increase utilization where possible, encourage other refining nations to raise output and avoid protectionist export measures that could simply move shortages from one country to another.

The G7 also instructed the IEA to assess the effect of the intervention and submit recommendations within 20 days, including how emergency stocks should eventually be replenished.

For Trump, the agreement offers an immediate response to one of the most politically sensitive economic problems confronting his administration ahead of the Nov. 3 midterm elections. Diesel prices affect farmers, truckers and businesses throughout the country, while higher transportation costs threaten to keep inflation elevated even as other price pressures moderate.

For Europe, the agreement offers the possibility of easing fuel costs without confronting a U.S. diesel export restriction that officials warned could further tighten European supplies.

And for global markets, the 100 million-barrel intervention represents another attempt to bridge the gap until ordinary energy trade becomes more reliable.

The effectiveness of that strategy will depend on how much diesel actually reaches markets during the first 20 days, whether refineries can increase output and whether continued fighting in Iran and Ukraine creates additional disruptions faster than governments can replace lost supplies.

Original article