BRUSSELS(National Times)- European countries agreed to release diesel stocks on Friday after the White House pressured governments to do so, in a bid to cool surging fuel prices linked to the Iran war.
“Europe has just agreed to release a massive amount of their heavily stocked diesel oil. The process will begin immediately,” President Donald Trump wrote in a post on Truth Social.
Trump’s statement followed talks on Friday among EU governments, who discussed a proposal by France for European countries to release 50 million barrels of diesel, and for International Energy Agency members to release 50m barrels of crude oil, according to sources.
Under the proposal discussed by European governments, Europe would release part of the diesel volumes in a 20-day period, responding to Trump’s demand for a rapid release of fuel stocks.
French President Emmanuel Macron chaired a videoconference with G7 leaders on Friday afternoon to discuss the energy situation, the Elysee Palace said. It was not immediately clear if G7 countries had agreed to France’s proposal on the volumes of fuel to be released.
US diesel futures extended their price losses after reports of the stock release discussions, and were down more than four per cent to $4.4491 a gallon. Benchmark European diesel futures fell by over $100 a metric ton.
The discussions underscore growing pressure on Europe as Trump considers a potential ban on US diesel exports to help lower domestic fuel prices ahead of Nov 3 midterm elections.
In weighing its response, the EU needs to balance the need to ease soaring fuel costs against preserving emergency reserves to safeguard against uncertain supply from Gulf producers due to disruptions caused by the Iran war.
French President Macron spoke with Trump overnight, emphasising the need to work together to combat rising fuel prices and ensure the global availability of refined products, the Elysee Palace said. France currently holds the G7 presidency.
US pressure on Europe
According to sources, the Trump administration had told Germany and France to draw down emergency diesel inventories or face a potential US diesel export ban.
The US had demanded that large European countries release 100m barrels of diesel within a 20-day window, the sources said.
Global diesel supply has been hit by the Iran war and a Russian ban on exports after Ukraine damaged many of its refineries. Chinese refiners have also suspended fuel exports to bolster domestic stocks.
The proposed 50-million-barrel release equates to approximately 17pc of the EU’s total emergency stocks of diesel and gasoil, Eurostat data showed.
It reflects around 3pc of the bloc’s annual consumption of the fuel.
Europe used to rely on Russian and Middle Eastern diesel imports, but has increasingly relied on imports from the United States in recent years.
“Having been caught dragging their feet on promised strategic stock releases earlier this year and now jarred by possible US export restrictions, European countries will likely release more diesel and possibly crude from their stocks,” said Bob McNally, president of Rapidan Energy Group.
“European strategic stock releases are a necessary, if not sufficient, condition to prevent US export restrictions, which would still remain on the table given acute political anxiety in the White House about high pump prices.”
