Europe's diesel benchmark dropped nearly 6% on Friday as EU governments weighed releasing emergency fuel reserves after President Trump threatened to ban US diesel exports. The pressure comes as UK pump prices for diesel crossed £2 a litre for the first time, with the Iran war, attacks on Russian refineries and Chinese export curbs squeezing global supply.
Diesel futures slide on reserve-release talk
Europe's benchmark diesel futures contract fell as low as $1364 a tonne, around $185 a barrel, a near 6% drop on Friday morning. Traders bet that European leaders would act after a G7 call later that day.
Trump has asked Europe to release at least 100mn barrels of diesel, according to diplomats, and threatened a ban on US diesel exports if it does not comply. The EU is instead considering a French counter-proposal under which European countries would release 50mn barrels of diesel, with IEA members adding another 50mn barrels of crude.
Trump threat collides with midterm politics
Bessent, the US Treasury secretary, has urged European countries to release diesel supplies immediately, arguing that US farmers, truckers and businesses should not bear the burden of rising prices. Washington's demands come as Trump faces pressure to ease costs for US drivers ahead of November's midterm elections.
However, a US export ban would likely push diesel prices higher in the UK and EU even as it eases prices at home. Diesel has been trading above $200 a barrel across the US, Europe and Asia, partly because Beijing granted its biggest refiners no fuel-export quotas for October, except to Hong Kong and Macau.
UK pump prices hit a record
British diesel prices reached 200.01p a litre, the RAC said, up 40.5% since late February. That was when the US-Israel war on Iran began disrupting crude and refined-product supplies from the Gulf. Filling an average family car with diesel now costs £110, almost £32 more than before the war.
Simon Williams, the RAC's head of policy, said: "This is a pump price threshold that no one wanted to cross." Britain relies on the US for about 30% of its diesel, with most of the rest coming from mainland Europe, and holds reserve supplies for 42 days.
Supply squeeze has several sources
Disruption to diesel supply predates the current standoff. Before the Ukraine war, Russia supplied between 10% and 15% of world diesel. Ukrainian attacks on Russian refineries have further constrained supplies of diesel on the world market.
Around 10% of global diesel supply also transited the Strait of Hormuz before Iran began disrupting shipping through it. Rising fuel costs have added to broader inflation pressure on households, and the squeeze has renewed scrutiny of crude oil markets as G7 and IEA members weigh a coordinated response.
Sources: Markets (FT), BBC News, The Guardian
Trading involves risk.
Risk Disclaimer
