The G7 has agreed to release 100 million barrels of oil and diesel in a bid to ease supply pressures that have caused prices to skyrocket.

The group of advanced economies, including the US, said the move would include a "substantial release" of diesel in the coming days.

President Donald Trump had threatened to ban diesel exports in a move which would have eased pressure on prices for US consumers ahead of November's midterm elections, but pushed up prices elsewhere.

In a joint statement, the G7 said member countries had now agreed to "refrain from export restrictions on energy and energy products" on one another.

The G7 includes the US, UK, Canada, Japan, Germany, Italy and France, with the EU also represented at its meetings.

Trump had warned he would ban diesel exports from the US if European countries did not agree to put more of their own stocks onto the market.

On Friday, he said on social media: “Europe has just agreed to release a massive amount of their heavily stocked Diesel Oil. The process will begin immediately.”

His Treasury Secretary Scott Bessent had argued US farmers, truckers, and businesses "should not be left carrying the burden" as prices soar.

Diesel is used heavily by the haulage industry and in agriculture, meaning rises in the cost of the fuel feed through into essentials such as food.

But, following a meeting of G7 leaders, French President Emmanuel Macron said the bloc had agreed to release reserves of "up to 100 million barrels" within four months under the co-ordination of the International Energy Agency (IEA).

The UK was represented at the meeting by Foreign Secretary Ed Miliband, who said the measures would "stabilise energy supplies, build resilience in supply chains and shield households and businesses from price shocks".

Macron said the co-ordinated action would "bring down the prices of petroleum products, particularly diesel". Highlighting the agreement not to pursue export bans, Macron said "President Trump, in particular, was very clear on this point".

Speaking at the White House, Trump later said an export ban on diesel was "never really on the table".

In the joint statement, G7 leaders said: “We will implement our commitments with a co-ordinated release through the IEA of 100 million barrels to begin immediately over four months, including a frontloaded substantial diesel release within the first 20 days by G7 members and partners.”

It is not yet clear which partner countries will release stocks, nor how quickly.

The 100 million barrels will comprise a mix of diesel and crude oil. The price of global benchmark Brent crude oil briefly dropped below $100 a barrel, but rose back to around $102 by Friday evening. Before the US and Israel invaded Iran, it was trading at around $73.

Matt Smith, director of commodities research at Kpler, said oil had risen again due to renewed strikes between Saudi Arabia and the Houthis in Yemen.

"Oil prices were selling off strongly due to the announcement of strategic stock releases in Europe, but they reversed course on rumours of Saudi Arabia planning an offensive into Yemen as it looks to re-establish a safe path via Bab-Al Mandeb," he said.

European countries had pushed back against US threats to turn off American diesel, against a backdrop of the US-led war in the Middle East and reduced supplies from Russia and China.

The G7 leaders said they will also co-ordinate maintenance schedules to avoid multiple refineries being shut down at the same time, while encouraging countries with the capacity to do so to ramp up refining of diesel in particular.

Avoiding a ban on US diesel exports will offer significant relief to countries which are reliant on imports of the fuel, including the UK, where prices at the pump topped £2 a litre for the first time on Friday.

Over half of the UK's diesel is imported, with 31% of those imports coming from the US.

The US is one of the world's leading diesel suppliers, with domestic refineries churning out roughly four to five million barrels every day, according to the US Energy Information Administration (EIA).

Americans consume about 3.6 million barrels of that. Refiners export the remaining 1.2 to 1.5 million barrels per day, making the US a vital supplier to the global market.

Supplies of diesel internationally have been heavily constrained by the conflict in the Middle East, which has restricted the flow of both crude oil and refined diesel onto global markets.

Russia, which is also a major producer, has implemented its own export ban on diesel, following attacks on its refineries by Ukraine, further limiting supply. The G7 leaders stressed that they will maintain sanctions against Russia amid its ongoing war in Ukraine.

Diesel is harder to refine than petrol and, because of its use in the haulage industry and agriculture, it is very difficult to reduce demand.

Source: BBC

– Agencies