Image source, Reuters
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The G7 nations have agreed to release 100 million barrels of diesel to ease pressure on the supply chain caused by rising fuel prices.
This measure is intended to ensure “adequate diesel supply” in the coming days, according to the group of major economies including the United States.
US President Donald Trump had threatened to impose a ban on diesel exports, a move aimed at reducing price pressure on consumers ahead of the midterm elections in November, but it risked driving up diesel prices in other countries.
The G7 countries have also agreed not to impose export restrictions, especially on energy and energy-related products.
The G7 comprises the United States, United Kingdom, Canada, Japan, Germany, Italy, and France, along with representation from the European Union.
Trump’s Threat
President Trump had threatened to ban diesel exports if European nations did not supply fuel to the market from their own reserves.
“Europe has just agreed to release diesel from its large reserves. This process will begin immediately,” Trump wrote on social media on Friday.
US Treasury Secretary Scott Baesert stated that American farmers, truck drivers, and businesses should no longer bear the “burden” of rising prices.
Diesel is widely used in transportation and agriculture. Rising fuel prices also impact essential goods such as food.
Following the G7 meeting, French President Emmanuel Macron announced a coordinated effort with the International Energy Agency (IEA) to release up to 100 million barrels of diesel from reserves within four months.
British Foreign Secretary Ed Miliband represented the UK at the meeting and said the move is expected to “stabilize energy supplies, strengthen supply chains, and prevent sudden price surges in homes and businesses.”
Macron added that the coordinated decision will “reduce petroleum product prices, especially diesel.”
Regarding the agreement against export restrictions, he said, “President Trump was particularly clear on this matter.”
Who Will Supply How Much?
Image source, Reuters
Speaking recently at the White House, President Trump denied ever considering a ban on diesel exports.
“We will coordinate through the IEA to release 100 million barrels of diesel and fulfill our commitments. G7 members and partner countries will ensure adequate diesel supply within the first 20 days,” the G7 leaders said in a joint statement.
However, it remains unclear how much diesel each partner country will release and when.
The 100 million barrels will be a mix of diesel and crude oil. Brent crude prices had briefly fallen below $100 per barrel but had risen to around $102 by Friday evening.
Before the US and Israel launched attacks on Iran, Brent crude traded at about $73 per barrel in the international market.
Matt Smith, commodity research director at Kepler, attributed the rise in oil prices to the new conflict between Saudi Arabia and Houthi rebels in Yemen.
“After the announcement to supply from Europe’s strategic oil reserves, prices saw a significant drop, but rumors that Saudi Arabia is preparing military action in Yemen with plans to restore safe passage through the Bab al-Mandeb Strait have caused prices to rise again,” he explained.
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