The Group of Seven (G7) leaders have come to an agreement to coordinate the release of 100 million barrels of oil and fuel reserves via the International Energy Agency (IEA) in the face of surging energy prices pressuring consumers and businesses. The four months plan will be started right away, and the amount of diesel released would be significant in about the first 20 days of the program.
Diesel Release to Be Frontloaded
The deal was revealed at a virtual summit led by French President Emmanuel Macron, who is also the G7 chairman, via video calls. Officials said the release would be augmented with a “frontloaded” amount of diesel in the first 20 days and then would continue to be gradually released throughout the rest of four months.
The diesel release will be opened as soon as possible, U.S. President Donald Trump said. The shift follows a surge in gas prices in the U.S. and Europe. On September 30, AAA reported the national average price for diesel at about USD 6.41 per gallon as it rose to a new price record of USD 6.53 per gallon on September 22.
G7 also agreed not to impose restrictions on energy exports among member countries and recommended to important energy exporters to ensure supply availability for the global energy markets.
Energy Supply Disruptions Add to Price Pressure
This is happening as there are huge disturbances in the energy supply chain. Refinery impacts and limitations on key export lanes have cut supply of refined fuels and further confusion has been introduced into global energy markets by disruptions in the Strait of Hormuz.
The simultaneous release was aimed at, “supply more liquidity to the energy markets and alleviate the pressure on its prices,” Macron said. The G7 have also directed other countries with “large refining capacity” to ramp-up refining, or refining their diesel stocks where possible.
Concerns Still Remain on Reserve Release
The new announcement also coincides with earlier pledge by the IEA members to release emergency oil stocks. This has lead to speculation whether this represents new or existing supplies that were previously agreed.
Oil prices retreated after the release, but analysts noted that the specific makeup and release date of the oil might not have an immediate impact.