The “war” on diesel: European reserves and Trump, who has run out of… patience
The war with Iran and disruptions to exports have limited availability
ALPHANEWSLIVE
The G7 agreement to coordinate the release of up to 100 million barrels of oil and petroleum products is changing the landscape of the diesel market, as European countries move to use part of their strategic reserves.
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This development follows pressure exerted in recent days by the United States on European governments, with Donald Trump publicly welcoming the agreement.
The international situation remains tense. The war with Iran, disruptions to oil flows through the Strait of Hormuz, restrictions on Russian exports, and losses in refinery output have limited the availability of diesel.
In the U.S., the issue has taken on a political dimension ahead of the November midterm elections, as the Trump administration seeks to keep fuel costs down for consumers.
How We Got to This New Intervention
The current debate has its roots in the International Energy Agency’s previous major initiative.
In March, IEA member states decided to release a total of 400 million barrels from emergency reserves following the severe disruptions caused by the conflict in the Middle East.
According to Reuters, the U.S. request amounted to 120 million barrels over six months, a quantity exceeding 40% of Europe’s emergency reserves in this category.
Where are the largest quantities located?
Most of them are in France and Germany.
France has approximately 8.2 million metric tons and Germany 5.6 million metric tons, with the two countries together accounting for nearly 35% of the European total.
Of this total, approximately 43.5 million metric tons were crude oil, 39 million metric tons were diesel and related petroleum products, and 10.4 million metric tons were gasoline.
Available reserves, however, are not the same everywhere. Finland had enough reserves to cover 178 days of net imports, Greece 112, Belgium 108, Sweden 107, and Spain 104.
What European legislation provides for
These quantities are not intended for day-to-day price stabilization but rather as a safety net in the event of a serious supply disruption.
Overall, the EU continues to meet the minimum levels set by the regulatory framework, although there are significant variations among member states.
The G7 Agreement
Ahead of Friday’s meeting, France, Germany, the United Kingdom, Italy, and Ireland, along with the European Commission, had sought a common stance in the face of U.S. pressure.
Before the final decision, France had proposed approximately 50 million barrels of diesel from European reserves and a corresponding amount of crude oil from IEA member countries. The agreement established the total scale of the intervention, without necessarily adopting the French proposal as is.
Trump’s Reaction
Donald Trump commented on the development via Truth Social, noting that Europe had agreed to release a large quantity of diesel.
Such a measure would have a significant impact on Europe, which has increased its dependence on U.S. supplies following the sharp decline in Russian exports.
What Might Change in Practice
The release of additional diesel supplies could provide temporary relief and ease pressure on prices.
However, there are factors that cannot be changed immediately. Refinery output does not increase overnight, while disrupted trade flows from the Middle East and Russia continue to affect supply.
IEA Director Fatih Birol, had pointed out that part of the volume from the previous coordinated intervention had not yet reached the market, indicating that the impact of such measures is not necessarily immediate.
Analysts have also pointed out that such a decision could create problems for the U.S. market itself if refineries were to lose a significant portion of their export markets.
The Dilemma for Europe
The G7 agreement provides an immediate response to market pressures, but it does not resolve the uncertainty surrounding the duration of the crisis.
Using a larger portion of reserves increases the quantities that can now reach buyers, but reduces the safety margin in case the disruptions last longer.
Holding onto more supplies offers greater protection for the coming months, but limits the ability to intervene immediately.
Until then, Europe will continue to monitor its reserves, and Washington will monitor its… reserves of patience.
