G7 to release another 100 million barrels from reserves — why diesel comes first
Global diesel inventories have fallen to low levels, while disruption in the Strait of Hormuz and Russia’s export ban have left the market facing a daily shortfall of more than 1 million barrels.
G7 to release another 100 million barrels from reserves — why diesel comes first
The Group of Seven (G7) agreed on Friday (October 2) to release up to 100 million barrels of oil and diesel reserves over four months, coordinated by the International Energy Agency (IEA). A large volume of the diesel is to be released up front within the first 20 days. The statement was issued by the office of French President Emmanuel Macron, whose country holds the G7 presidency. Macron chaired the meeting by video link.
The statement did not specify the respective amounts of crude oil and diesel, nor distinguish between new commitments and supplies announced in March. The G7 also said it would discuss within the IEA framework in the coming days whether additional diesel releases were needed.
[Editor's note: Closing prices and falls for WTI and Brent crude futures on October 2 could not be verified from the figures in the original draft.]
US-Europe tensions: threat of an export ban or “constructive discussions”?
Shortly before the statement was issued, US President Donald Trump said on social media that Europe had “just agreed to release large amounts of plentiful diesel inventories” and that the process would “start immediately”. Washington reportedly pressured Europe over the past week and threatened to ban US diesel exports. Macron, however, said Trump had not threatened an export ban, describing the discussions between the two sides as “constructive”. He said all countries had pledged not to impose export bans.
The IEA-coordinated release of 400 million barrels announced in March has still not been completed in full. Trump criticised Europe for releasing supplies too slowly, while the United States approved an additional release of 40 million barrels from its strategic petroleum reserves this week, completing its share under the March agreement.
Why release diesel first?
Diesel is the oil product facing the tightest supply in the current crisis. US diesel inventories fell to a record low of 107.9 million barrels on September 11. The spread between diesel and crude oil prices — known as the crack spread — exceeded US$100 a barrel in Europe for the first time in early September. Spot diesel prices in southern Europe reached about US$199 a barrel at one point, compared with a peak of about US$215 in April. The equivalent spread on the US Gulf Coast also hit a record, at about five times its pre-war level.
There are three main reasons for the diesel shortage: the Strait of Hormuz has been effectively closed since fighting broke out; Russia’s diesel export ban was extended to September 30; and US inventories are low. Argus estimates that the global market is short of 1.3 million to 1.4 million barrels of diesel a day, equivalent to 15% to 20% of international diesel shipments.
Will 100 million barrels be enough?
Spread evenly over four months, 100 million barrels would amount to about 830,000 barrels a day, with the release rate during the initial front-loaded period expected to be higher. IEA data show that an average of about 20 million barrels of crude oil and petroleum products passed through the Strait of Hormuz each day in 2025. IEA executive director Fatih Birol said in March that restoring shipping through the strait was the key to returning supplies to stability.
Macron also said G7 members would coordinate to increase production, reduce tanker transport costs such as insurance premiums, and encourage more tankers to pass through the Strait of Hormuz.
What to watch
- Whether diesel crack spreads can retreat from their recent record highs;
- whether commercial inventories in the US and Europe can recover; and
- whether marine insurance and rerouting costs will fall.