G-7 nations to release 100 million barrels of oil and diesel fuel as prices soar
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- The Group of 7 plans to release 100 million barrels of oil and fuel over four months, with a substantial diesel release promised within the next 20 days.
- The move comes as U.S. diesel prices hover near record highs, fueled by an eight-month war with Iran and other pressures on energy markets.
- President Trump faces growing political pressure to curb fuel costs before November’s midterm elections, while G-7 nations pledged not to restrict energy exports among themselves.
The Group of 7 industrial nations said Friday that they plan to release 100 million barrels of oil and fuel products in the coming weeks, starting with “substantial” amounts of diesel after the fuel recently hit record-high prices in the United States.
President Trump said the diesel release would happen “immediately,” echoing a G-7 statement that a “frontloaded substantial release” of diesel would begin within the next 20 days with the rest over four months.
Trump and his Republican Party face pressure to address surging prices ahead of the Nov. 3 midterm elections, and the president announced the action Friday on social media. His approval ratings on the economy hit a new low, according to an AP-NORC poll, as the Iran war and his trade battles have increased U.S. prices for oil and other goods.
Gas prices in the U.S. and abroad have soared during the eight-month-long war, a cost Trump has repeatedly said is worth it for making sure Iran does not obtain nuclear weapons.
The surging price of diesel, which is crucial for transportation, farming and industry, has had broad effects across the economy. The national average for a gallon of diesel in the U.S. was $6.37 on Friday, according to AAA, after hitting a record $6.52 on Sept. 22. Diesel prices have hit records in Europe, too.
The release of diesel in Europe might mean fewer exports of diesel from the U.S., which could lower prices by 25 to 50 cents per gallon after a few weeks, said Michael Lynch, distinguished fellow at Energy Policy Research Foundation, a nonpartisan research institution focused on energy and economics.
France, which holds the rotating presidency of the G-7 group, made the announcement in a statement released after videoconference talks over which French President Emmanuel Macron presided. The G-7 members are Canada, France, Germany, Italy, Japan, the U.K. and the U.S., plus EU representation.
The release follows a March announcement after the Iran war broke out that International Energy Agency member countries would release 426 million barrels of oil and products to stabilize the oil market. European Union countries committed about 92 million barrels, a promise weighted toward refined products made from crude such as diesel.
Trump has criticized Europe for not making those barrels available quickly enough. The pressure intensified this week, prompting emergency talks among European officials on Thursday as the European Union sought a coordinated response to Washington’s demands.
The deal will help alleviate concerns over Trump’s threats to implement a U.S. diesel export ban, with G-7 nations reaffirming their commitment to “refrain from export restrictions on energy and energy products” among member countries. Oil market analysts warned that a U.S. export ban could lower prices in the short term but eventually backfire by reducing supplies of gasoline since diesel output can’t be lowered without also cutting overall refinery production.
“We are all committed to ensuring there are no export bans, and President Trump, in particular, was very clear on this point,” Macron said Friday.
“This common decision and this unity should bring down prices,” he added. “The volumes we’re releasing should also add liquidity to the market and bring down prices.”
Friday’s announcement pushed U.S. oil prices down 2%, but “the impact was lessened by lack of clarity on an important question,” said Pavel Molchanov, investment strategy analyst at Raymond James. Is the 100 million barrels in addition to the amount already agreed in March, or “is this the final portion of the existing pledge?” he said.
In practice, the amount of fresh supply may be a fraction of the headline figure because substantial volumes remain available under the earlier release plan, according to two European diplomats who asked not to be identified discussing sensitive matters. A G-7 statement didn’t specify how much crude and diesel would be released or provide a breakdown of new commitments and previously pledged supplies.
About a third of the original release had yet to reach the market, International Energy Agency Executive Director Fatih Birol said Tuesday. As of that day, Germany had yet to release about 77% of its pledged stocks, while Spain had made available only about a third of its commitment. The U.S., by contrast, approved an additional 40 million barrels from its Strategic Petroleum Reserve this week, completing its contribution to the March agreement.
While more fuel supply is welcome news for consumers, the latest release offers only some short-term relief, and isn’t a long-term solution to the pressure on fuel availability globally.
Even though oil exports through the Strait of Hormuz have recovered close to their prewar levels in recent weeks, the volume of oil products such as gasoline and diesel from the Persian Gulf remains severely constricted due to war damage and other factors. Furthermore, Ukraine’s sustained attacks on Russian refineries has led the Kremlin to ban diesel exports through October.
Europe does not import Russian diesel, but other buyers of Russian diesel such as Turkey and Latin American countries must now compete with Europe for available barrels.
The emergency release could also be a short-term fix with the potential to do long-term harm, said Jim Krane, energy research fellow at Rice University’s Baker Institute.
“Draining stocks will reduce retail fuel prices for a while, at the cost of leaving Europe with less emergency cover,” Krane said. “At some point in the future Europe and the rest of the G-7 will have to refill their strategic reserves. Normally they try to do this when prices are low. Nobody knows when that will happen. It’s a risk.”
With two wars raging that involve attacks on refineries and exports, Krane said, “it’s not the best time to be frittering away your emergency stocks — especially when there is no visibility on future prices or peace agreements.”
Binkley and Leicester write for the Associated Press. Leicester reported from Paris. AP writers Michelle L. Price, David McHugh in Frankfurt, Germany, Cathy Bussewitz in New York and Bloomberg News contributed to this report.
