G7 to release 100 million barrels of oil and diesel, will it curb prices? — SkimNews
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- G7 nations agreed to release 100 million barrels of crude oil and diesel from emergency reserves, coordinated through the IEA, with a substantial diesel release slated for the first 20 days and the full drawdown lasting four months.
- Oil prices jumped Thursday, settling up more than $4 a barrel, while global diesel hit a record $6.50 per gallon according to AAA, up from $5.61 just a month earlier.
- Three supply disruptions are driving the crisis: Middle East diesel no longer reaching Europe, Russia ceasing all diesel exports after Ukrainian attacks on its refineries, and China halting diesel exports, according to former IEA official Neil Atkinson.
- Trump initially threatened to ban US diesel exports if Europe did not release its emergency stocks, then walked back the threat on Friday insisting the ban "was never really on the table," while the White House prepares a separate executive order on diesel prices expected as early as next week.
- Capital Economics economist Hamad Hussain warned the G7 release will only put "short-lived" downward pressure on prices, and Atkinson said the move "doesn't deal with the fundamental problem that the global supply remains lower than normal," seven months into the Middle East war.
- US diesel inventories are at their lowest seasonal level since records began in 1982, according to Middle East Council analyst Frederic Schneider, who noted diesel powers trucks, freight trains, ships, harvesters, and mining equipment—meaning a diesel shock acts as a tax on food, building materials, and nearly all delivered goods.
- Brent crude briefly dropped below $100 a barrel after the G7 announcement before rebounding to about $102, and analysts at Zaye Capital Markets warned the price relief could reverse by Monday morning.
Why it matters: Republican strategists fear diesel above $6—a 70% jump since the war began—will cost votes in November midterms, but analysts from Capital Economics and a former IEA official warn the 100-million-barrel release only buys time without fixing the structural supply shortfall that has pushed US diesel inventories to their lowest seasonal level since records began in 1982.
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