UK diesel hits £2 a litre as G7 begins IEA-coordinated drawdown
Macquarie Group’s Walt Chancellor said Friday that the G7’s coordinated release of up to 100 million barrels of emergency diesel and crude reserves would not address the underlying US energy problem, which he characterized as a “global energy problem” requiring more oil through the Strait of Hormuz.
“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,” Chancellor told CNBC. “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.”
France’s president Emmanuel Macron announced the G7 decision after a leaders’ video meeting. The group comprises the US, UK, Germany, Italy, Canada and Japan, with Macron as current chair. Macron said G7 nations wanted to “work in a coordinated manner to help bring down the prices of petroleum products, particularly diesel.”
The drawdown of reserves from some of the world’s largest economies will be coordinated by the International Energy Agency and will take place within four months, Macron said. G7 members and partners committed to front-loading a substantial diesel release within the first 20 days, and the leaders said they would discuss the “possibility of additional diesel releases as necessary” in the coming days.
Macron added that G7 leaders had agreed to make production more flexible so refineries can work at their maximum capacity, and that they would not take any measures to “restrict the exchange of energy and petroleum products between partner countries.”
“We have all committed together to releasing these strategic reserves in the proportions I mentioned, with a focus on diesel, and we are all committed to ensuring there are no export bans, and President Trump, in particular, was very clear on this point,” Macron said at the Élysée Palace alongside his economics minister Roland Lescure.
European countries had come under pressure from the White House in recent days to release emergency supplies or face a US diesel export ban. Trump has said he is considering stopping diesel exports to help lower domestic fuel prices before the US midterm elections in November.
A US export ban would have presented a considerable challenge for Europe, which produces about 70% of the diesel it consumes from domestic refineries, but relies on imports to make up the shortfall. Oil analysts had also raised concerns that competition for diesel cargoes on the global market would push prices even higher.
Trump welcomed the release on his Truth Social platform: “Europe has just agreed to release a massive amount of their heavily stocked diesel oil. The process will begin immediately.”
In the United Kingdom, the average price of diesel climbed to a record high of £2 a litre on Friday, the RAC motoring group reported, putting more pressure on motorists. The cost of filling up an average family car is now £110, according to the RAC, nearly £32 more than before the Iran war.
“This is a pump price threshold that no one wanted to cross,” said Simon Williams, the RAC’s head of policy. The RAC figures measure the average cost of fuel, but in reality many forecourts have been selling diesel above £2 a litre for some time.
The IEA, the world’s energy watchdog, ordered the largest release of government oil reserves in its history in March when it agreed to release 400m barrels of emergency crude, to help calm the oil-price shock sparked by the US-Israeli attacks on Iran. The intervention represented a third of the group’s total government stockpiles and was more than double the release of 182m barrels of oil made in 2022 following Russia’s invasion of Ukraine.
Brent crude oil was trading at just above $100 a barrel on Friday, compared with about $72 before the Iran war started.