Oil Dips As Europe Folds - G7 Agrees To 100-Million-Barrel Emergency Release
Update (1000ET): French President Macron has just confirmed what we reported earlier, that the G7 has agreed to release as much as 100 million barrels of emergency oil and diesel stocks after pressure from the Trump administration to quell rising fuel prices.
The release, being coordinated by the International Energy Agency, will take place over the next four months, Emmanuel Macron, France’s president told journalists in a briefing on Friday. He is also the current chair of the G7 nations.
The G7 would like to trigger a drop in fuel prices, he said.
Trump was quick to respond too, with no real gloating yet...
Oil prices fell back towards the low of the day on the news...
Both US and EU diesel prices are also lower...
With little oil of its own, and an outsized appetite for diesel, Europe again found itself bargaining from a position of relative weakness... and bending the knee.
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As we detailed earlier, Bloomberg's reported that France proposed that other European countries and International Energy Agency members release 100 million barrels of diesel and crude oil from emergency stockpiles would signal that Brussels is caving to President Trump’s demand.
Europe's dependence on US fuel supplies gives the Trump administration major bargaining power as the continent approaches winter with below-average energy supplies and exposure to higher costs if a cold snap or further supply disruptions materialize.
The report has not been officially confirmed and is based on sources, but it says European countries are considering releasing 50 million barrels of diesel, with International Energy Agency members making another 50 million barrels of crude available.
One day earlier, Reuters reported that the Trump administration asked Germany and France to release emergency diesel inventories to help create a buffer against the supply squeeze in the industrial fuel or face a potential US diesel export ban.
The art of wheeling and dealing is all about leverage, and it appears the US threat of a diesel export ban might be enough to make Europeans come to their senses and dump emergency fuel and crude supplies onto the market.
Bloomberg also mentioned that French President Emmanuel Macron and President Trump spoke overnight and that G7 leaders are set to convene around 0830 ET.
"It is in Europe's best interest to work with the United States as we pursue multiple pathways to boost the supply of refined products and lower costs for consumers," one source, a US official, told Reuters on Thursday.