G7 nations to release diesel stocks as wars in Europe and Middle East constrain fuel supplies

The Group of Seven nations agreed Friday to release 100 million barrels of reserves in an effort to bring down surging diesel fuel prices.

In a joint statement, the G7 leaders said the release will begin immediately and continue over four months with “a frontloaded substantial diesel release within the first 20 days” coordinated through the International Energy Agency.

The G7 members are France, Canada, Germany, Italy, Japan, the United Kingdom and the United States. France currently holds the group’s presidency. The European Union also participates in its meetings.

President Donald Trump said moments before that Europe had “agreed to release a massive amount of their heavily stocked Diesel Oil.”

Average U.S. diesel prices surged to a record high of $6.50 per gallon late last month, according to AAA, up sharply from a year ago amid supply disruptions fueled by the Iran war and Russia’s full-scale invasion of Ukraine.

In a post on social media, U.S. Treasury Secretary Scott Bessent said Thursday that America’s European partners “should accelerate delivery on their existing commitments and make additional supplies immediately available to address ongoing disruptions.”

He added: “America is doing its part. We look to our allies to match their commitments with action.”

The U.S. government is currently facing mounting political pressure to tackle soaring fuel prices ahead of the midterm elections in November.

EU crisis talks

The prospect of the world’s largest diesel exporter implementing an outright ban on diesel exports has prompted firm pushback from the U.S. energy industry and raised alarm across the Atlantic. The U.S. supplied around half of the European Union’s diesel imports in August, according to the International Energy Agency, underscoring the 27-nation bloc’s exposure to a potential U.S. export ban.

EU member states are scheduled to hold crisis talks on Friday, seeking to develop a coordinated response to soaring diesel prices.

Oil prices fell sharply on Friday morning after Reuters reported that European Union member states were discussing a French proposal to release additional diesel reserves following pressure from the Trump administration.

The report, which cited a single unnamed source familiar with details of the discussion, said France had proposed that EU nations release 50 million barrels of diesel and International Energy Agency members release 50 million barrels of crude oil.

CNBC could not independently verify the report. A spokesperson for the French government and the IEA were not immediately available to comment.

Speaking to reporters in Milwaukee at the G20 trade ministers meeting, EU trade chief Maros Sefcovic said he had discussed diesel supplies and soaring prices with his U.S. counterpart, U.S. Trade Representative Jamieson Greer.

“We have every interest in ⁠working together on lowering the prices, be it on diesel or also other products from oil and gas supplies,” Sefcovic said, according to Reuters.

He added that any move from the U.S. to restrict diesel exports would be unexpected and have a negative impact on Europe’s economic outlook.

Energy strategists at Macquarie Group said Thursday it is understandable that the U.S. position on the global diesel crisis has taken on an apparent global dimension.

“The core issue the US faces is not a diesel problem. Nor is it a refined product problem. It may not even be a petroleum problem. It is a global energy problem,” Macquarie Group’s Walt Chancellor said in a research note.

“So what is the solution then? In short, more oil through the Strait of Hormuz and out of the Middle East. Anything short of that is really just shuffling deck chairs,” he added.

The Strait of Hormuz is a major throughway for the global oil trade that saw ship traffic stifled after the U.S. and Israel attacked Iran in late February. But this week it saw daily exports return to prewar levels.

— CNBC’s Kevin Breuninger contributed to this report.