G7 to release 100 million barrels of oil and diesel

The Group of Seven announced on Friday, October 2, that it plans to release 100 million barrels of crude oil and petroleum products over the coming weeks. The intervention will begin with substantial amounts of diesel released within the next 20 days, with the remainder distributed over four months.

US crude oil prices dropped 2% following the announcement. Pavel Molchanov, investment strategy analyst at Raymond James, noted that market impact was limited by uncertainty over whether the 100 million barrels are new supply or part of the 426 million barrels pledged by International Energy Agency members in March. European Union members had previously committed 92 million barrels under that program.

The intervention comes as retail diesel reached record highs in the United States and Europe. The national average retail price for diesel in the US stood at $6.37 per gallon on Friday, slightly below its record of $6.52 set on September 22, according to the American Automobile Association. Michael Lynch, senior fellow at the Energy Policy Research Foundation, estimated that European releases could ease US fuel prices by 25 to 50 cents per gallon by reducing the need for US exports.

The G7 joint statement confirmed that members agreed not to restrict energy exports to each other. Supplies have tightened globally due to Russia banning fuel exports after drone strikes on its refineries, an eight-month war with Iran, and damage to export infrastructure in the Persian Gulf.