IEA agrees to speed up release of over 20 mln barrels of diesel from reserves
The decision comes amid record fuel prices and pressure from the White House
Diesel shortages stem from supply disruptions in the Persian Gulf region and Russia / Photo: StockMediaSeller/Shutterstock.com
International Energy Agency member countries have agreed to release more than 20 million barrels of diesel onto the market as soon as possible, Reuters reports. They will also complete the release of 100 million barrels of oil pledged under agreements reached in March that have yet to reach the market. The decision comes amid record diesel prices and pressure from U.S. President Trump, who has demanded that European Union countries tap their reserves or face a U.S. diesel export ban.
Details
IEA members “agreed to accelerate the release of the remaining volumes, with specific plans already in place, including over 20 million barrels of diesel as soon as possible,” according to the IEA statement. A larger release of 50 million barrels had previously been under consideration: Reuters reported that EU countries were discussing a French proposal to release that volume of diesel alongside 50 million barrels of crude from IEA members. Around 330 million barrels have been released from reserves so far, Reuters reported.
Market reaction
Following the IEA statement, Europe’s benchmark gas oil contract, which covers fuels including diesel, ticked higher to $1,430.75 per metric ton, although it ended the trading day lower, Reuters noted.
“Gas oil prices ticking higher suggests some disappointment that we are not seeing any firm commitment to add additional barrels here and now,” said Saxo Bank analyst Ole Hansen. “Prices are high but we are not dealing with any shortages as such, so with that in mind it probably makes sense to keep the powder dry for now.”
Context
In March, the IEA’s 32 member countries agreed to the largest release of strategic reserves in the organization’s history: more than 400 million barrels of crude and oil products. The decision followed a sharp reduction in supplies through the Strait of Hormuz as the conflict in the Middle East escalated.
Trump is seeking to bring down fuel prices ahead of the November 3 midterm elections in the U.S. Diesel prices have hit record highs in many markets amid supply disruptions caused by the war in the Middle East and the Russia-Ukraine conflict. This poses inflation and cost-of-living risks for governments and consumers.
