G7 member countries agreed on Friday to release 100 million barrels of diesel and other reserves through the International Energy Agency to help to stabilise markets.
A joint leaders' statement, released by the office of French President Emmanuel Macron, said G7 members agreed to begin the release immediately and continue over four months, including a “front-loaded substantial diesel release within the first 20 days” by members and partners.
Oil prices softened after the announcement, with Brent crude trading 1.48 per cent lower at $100.8 per barrel. West Texas Intermediate, which tracks US crude, traded 2.66 per cent lower at $90.40 per barrel.
Data from intelligence firm Kpler showed oil flows through the Strait of Hormuz rising to near prewar levels as oil producers navigate alternative modes to transport fuel out of the region and the US military escorts some vessels. Kpler data showed at least 16.5 million barrels per day left the Middle East in September.
“Oil shipment figures have improved in recent days, and between Hormuz and the Yanbu pipeline … we are seeing three-quarters of the prewar volumes moving today,” Mr Macron said after a call with G7 leaders.
Leaders also condemned Iran's attacks against its neighbours in the region, while reaffirming they would maintain their sanctions against Russia.
Moments before the statement was released, US President Donald Trump said in a social media post that Europe had “just agreed to release a massive amount of their heavily stocked diesel oil”.
The conflict in the Middle East and Russia's war against Ukraine have triggered a surge in global diesel prices, amplifying political pressure on Mr Trump at home before the midterm elections next month. Diesel prices in the US hit $6.50 per gallon last week, nearly $3 higher than the same time last year.
Europe is also facing higher diesel prices, which hit a record of €2.24 per litre, compared to €1.59 before the Iran war began on February 28.
The Trump administration had been pressuring Europe to release its diesel stocks. Last week he again pressed Ukraine to halt its attacks on Russian diesel facilities. On Thursday, Treasury Secretary Scott Bessent urged the continent to “immediately” tap its reserves.
Mr Trump has also threatened a US diesel ban in a bid to ease prices, triggering concerns from the American energy industry. Such a move would be an alarming prospect for the European Union, which heavily relies on fossil fuel imports, as it approaches winter. The IEA said the US supplied roughly half of the EU's diesel imports in August.
Analysts at Oxford Economics estimate a full ban could lift European wholesale prices by 40 to 50 per cent, while adding as much as 0.4 percentage points to US core inflation in 2027.
G7 leaders said they reaffirmed their commitment to refrain from placing export restrictions on energy and energy products between G7 members and also urged producers to refrain from imposing bans.
Mr Macron said Mr Trump did not threaten to issue an embargo on US diesel, classifying the discussion as a “constructive one”.
“We all committed to releasing strategic reserves in the amounts discussed – prioritising diesel – and we all pledged that there would be no export bans; President Trump was particularly clear on this point. I think this is very positive. We are stepping up co-ordination,” he said.
IEA member countries agreed in March to co-ordinate to release a record 400 million barrels of strategic reserves. IEA chief Fatih Birol this week said member countries had released two thirds of those commitments to markets.
Sunniva Rose contributed to this report from Paris.
