G7 opens the taps with 100 million barrels of oil and diesel

International

xUP to 100 million barrels of oil and diesel will be released onto global markets after G7 countries agreed on an emergency effort to ease tight supplies and rising fuel prices.

The agreement by the G7 advanced economies includes a substantial release of diesel within the first 20 days and will be coordinated through the International Energy Agency (IEA).

The move follows US President Donald Trump’s threat to restrict American diesel exports unless European countries released more of their own reserves. Trump later said an export ban was “never really on the table”.

On Friday, Trump said on social media, “Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil. The process will begin immediately.”

The G7 comprises the US, UK, Canada, Japan, Germany, Italy and France, with the European Union also represented at its meetings.

French President Emmanuel Macron said the coordinated release could total “up to 100 million barrels” over four months. The G7 also agreed to refrain from imposing energy export restrictions on one another.

Its joint statement said the release would begin immediately, with G7 members and partner countries coordinating the deployment through the IEA. The initial phase will prioritise diesel, although the full release will include both crude oil and refined fuel.

The agreement does not yet specify which partner countries will contribute reserves or how quickly individual releases will take place.

The UK was represented by Foreign Secretary Ed Miliband, who said the measures would “stabilise energy supplies, build resilience in supply chains and shield households and businesses from price shocks”.

Global benchmark Brent crude briefly fell below $100 a barrel after the agreement was announced before rising to around $102 on Friday evening. It had been trading at about $73 before the US and Israel invaded Iran.

Matt Smith, director of commodities research at Kpler, said prices had initially fallen on news of the stock releases before reversing amid reports of a possible Saudi offensive in Yemen.

“Oil prices were selling off strongly due to the announcement of strategic stock releases in Europe, but they reversed course on rumours of Saudi Arabia planning an offensive into Yemen as it looks to re-establish a safe path via Bab-Al Mandeb,” he said in a BBC report.

The G7 also agreed to coordinate refinery maintenance to avoid simultaneous shutdowns and encourage countries with spare capacity to increase diesel production.

The measures come as Middle East conflict has disrupted crude and refined fuel supplies, while Russian export restrictions following attacks on its refineries have further tightened the market.

More than half of the UK’s diesel is imported, with 31% of those imports coming from the US. UK pump prices exceeded £2 a litre for the first time on Friday.(MyTVCebu)