U.S. and Allies Agree to Release Diesel Reserves as Prices Soar

LONDON -- Leaders from some of the world's wealthiest nations agreed Friday to release diesel from their reserve stockpiles to help ease a growing crisis over record-high prices driven mostly by the war in Iran.Under the plan, the Group of 7 countries -- the United States, France, Italy, Germany, Japan, Britain and Canada -- will release 100 million barrels of diesel and crude oil from strategic stockpiles over the coming four months. That is equivalent to around one day's worth of global oil demand. The effort will be coordinated by the International Energy Agency, a Paris-based multilateral organization.Calling the plan "decisive, coordinated measures to stabilize immediate energy supplies" and curb price spikes, the G7 said they would also make a "substantial" release of diesel within 20 days.The group did not specify how much of the fuel to be released would be diesel and how much would be unrefined crude oil. Diesel and related fuels make up roughly 28% of the world's oil demand, according to the IEA. They have been in especially short supply because military strikes on energy infrastructure in the Middle East and Russia have severely damaged refineries, reducing the world's capacity to turn oil into the fuels that consumers use.The deal is the second time nations have come together for a major release of fuel since the United States and Israel launched military strikes against Iran on Feb. 28, triggering a global energy crisis. In March, the IEA announced that world leaders would tap 400 million barrels of oil, the largest coordinated release of stockpiled oil on record by members of the energy agency.President Donald Trump had threatened to impose a ban on the export of U.S. diesel, a move that has drawn fierce opposition from U.S. oil companies and European leaders. Retail diesel prices in the United States topped $6.50 a gallon in recent weeks, the highest ever, putting pressure on Trump and Republicans to find ways to lower prices before the midterm elections in November."Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil," Trump said on social media of the G7 announcement.French President Emmanuel Macron, the current G7 chair, said Trump had committed to not impose an export ban on diesel fuel. Macron, who convened Friday's teleconference, said he expected the release of emergency oil and diesel to cause gasoline and fuel prices to "drop at the pump as quickly as possible."Ursula von der Leyen, the president of the 27-nation European Union, said the bloc supported the G7 decision not to restrict exports.ClearView, an energy research firm in Washington, said in a note to clients Friday that it would not "rule out export constraints governing destinations outside the G7, but odds now look lower."The price of diesel futures in the United States fell 6% Friday. Prices that consumers pay at the pump typically follow, albeit more slowly.Hamad Hussain, a senior economist with Capital Economics, a research firm, said it could take as much as two weeks for retail prices to fall."We'll see some of the future alleviated, but it won't be immediately obvious for consumers at the pump," he said.A U.S. export ban on diesel would be deeply damaging in Europe, which has become increasingly dependent on U.S. fuel after banning Russian imports over Russia's invasion of Ukraine in 2022. The Continent has closed significant refining capacity in recent years because of high operating costs as well as climate regulations. That has exacerbated Europe's vulnerability, making it even more reliant on imported crude and refined fuels from the Middle East, the United States and other regions.Europe imports about 1.5 million barrels a day, with a third coming from the United States, according to S&P Global, a market data firm."Europe has been very reluctant to let go of their stocks because they are concerned about a prolonged disruption, and they wish to hoard the supplies they have," said Robert McNally, president of Rapidan Energy Group, a research and consulting firm in Washington.Tom Kloza, chief energy adviser to Gulf Oil, called the G7 release "underwhelming," and said it amounts to barely half of the levels once imported from Russia.Russia had remained a big exporter of diesel beyond Europe, but this year banned exports after Ukrainian drone attacks damaged refineries. It renewed that ban this week.Another factor weighing on the diesel market is China, the world's biggest crude importer and a big supplier of diesel to other countries, especially in Asia. China recently started restricting its exports of refined fuel including diesel, something it had done earlier in the war in Iran but then eased.Hussain noted that if the release is evenly split between crude oil and diesel, it would amount to about 400,000 barrels a day of diesel entering the market. That's not enough to fully offset fuel that was once imported from Russia, but, he said, "it's definitely helpful."This article originally appeared in The New York Times.