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Diesel prices fell sharply as Europe considers releasing 50 million barrels to ease market pressure from the Trump administration, which threatened to ban US diesel exports.
Diesel prices in Europe fell sharply on Friday morning as European countries considered releasing 50 million barrels of diesel in response to days of political pressure from the Trump administration. The continent’s benchmark diesel futures contract dropped nearly 6 per cent to as low as $1,364 a tonne, equivalent to around $185 a barrel. Traders anticipated action from European leaders following a G7 meeting on Friday afternoon.
Market Reaction and Price Impact
The sharp drop in futures prices could translate to a fall of around eight cent a litre at the pump if passed on to consumers. Diesel prices have been trading above $200 a barrel in the US, Europe and Asia for several weeks due to multiple shocks to global refineries. In the UK, the price of diesel surpassed £2 per litre on Friday for the first time, while in Ireland the fuel traded at around €2.13.
The price surge has been driven by several factors, including the conflict with Iran, Russia’s war in Ukraine, and China’s decision to limit fuel exports. On Thursday, it emerged that Beijing had not granted its biggest refineries any quotas to export fuel in October, except to Hong Kong and Macau. These disruptions have tightened global diesel supplies and pushed prices to record levels.
US Pressure and European Response
President Trump has asked Europe to release at least 100 million barrels of diesel to the markets, according to two diplomats familiar with EU discussions, and threatened to ban US diesel exports if the continent does not comply. The EU is considering a French counterproposal in which European countries would release 50 million barrels of diesel. Members of the International Energy Agency (IEA) would also release an additional 50 million barrels of crude.
Trump’s insistence that Europe unlock its diesel reserves comes as he faces increasing political pressure to bring down high prices for US motorists in the run-up to November’s midterm elections, which will determine control of Congress. He said he was considering banning US refineries from selling diesel overseas.
In March, Europe committed to release 73 million barrels of refined fuels as part of a 400 million barrel strategic stock draw coordinated by the IEA in response to the conflict in the Middle East. The US has largely completed its share of that programme, but some European countries have not yet met their obligations, according to Fatih Birol, the head of the IEA.
Divisions and Diplomatic Efforts
G7 leaders held a call on Friday afternoon to discuss the US demands, according to multiple diplomats and officials. European leaders are wary of releasing stocks when the duration of the conflict with Iran remains uncertain and they are reluctant to be forced into a decision. A Commission spokeswoman, Anna-Kaisa Itkonen, said: we fully reject a ban on diesel. A ban would not be beneficial to anyone. It would undermine our trust in the US as a reliable partner. She declined to comment on the French proposals.
An Élysée official said on Friday that French president Emmanuel Macron has called for a remote meeting of G7 countries as soon as possible to discuss a coordinated response. Macron spoke with Trump overnight, urging the need to work together to fight rising petrol costs and to ensure the availability of refined products worldwide. He underscored that G7 nations had a common interest in acting in a concerted manner, without restricting exports, in his exchange with Trump, the Élysée official added.
The call comes after a crisis meeting of EU energy officials on Friday morning, at which member state representatives were in shock over the blackmail of Trump’s demands, according to one diplomat. Member state energy officials may meet for a second meeting of the EU’s so-called energy union taskforce this afternoon, according to one of the diplomats, as Europe seeks to build a coordinated response to the US threats.
Experts have warned that releasing diesel reserves could be a short-term buffer against soaring prices, but risks limiting protection against future shocks. Jonathan Owens, an operations and supply chain expert for the University of Salford, said emergency stocks were effectively an insurance policy, adding: using them now reduces protection against future disruption until those stocks are replenished.
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