The US has dropped its threat to ban fuel exports after G7 leaders agreed to release 100 million barrels of crude oil and diesel from strategic reserves. The deal, struck Friday, comes as President Donald Trump tries to ease diesel prices for American industry and farmers ahead of November's midterm elections.
The United States has backed away from a threat to halt fuel exports after G7 leaders agreed on Friday to a co-ordinated release of 100 million barrels of crude oil and diesel, run through the International Energy Agency. The decision follows a push by Trump to bring down high diesel prices for US industry and farmers before next month's midterm elections.
G7 pledges a four-month release
G7 leaders said the release would begin immediately and run over four months, acting "in light of ongoing market pressures". According to the joint statement, the plan calls for a "substantial" release of diesel reserves within the first 20 days, though it did not specify the split between crude and diesel or how much the US itself would contribute.
The statement also included a pledge from signatories, including the US, to refrain from export restrictions on energy products between G7 countries and called on other producers to avoid bans that could worsen market tensions. Asked whether Washington had ruled out a diesel export ban, the White House pointed to that pledge.
Diesel futures drop on the news
European diesel futures fell 8% to $1,337.75 a tonne after the announcement, the lowest level since early September. Wholesale diesel for sale in New York harbour dropped almost 5% to $4.43 a gallon.
Diesel prices had been trading above $200 a barrel in the US, Europe and Asia for weeks, hit by the Iran war, Russia's conflict with Ukraine, and China's decision to limit fuel exports. The price of diesel in the UK surpassed £2 per litre on Friday for the first time, according to the RAC.
Oil industry welcomes the deal
Trump had faced pressure from Republican lawmakers in farming states to impose an export ban, but the US oil industry lobbied hard against it and pushed the administration to lean on allies instead. The American Petroleum Institute, the industry's Washington lobby group, welcomed the outcome through spokesperson Bethany Williams.
France had earlier proposed that Europe release 50 million barrels of diesel while other IEA countries unlocked a further 50 million barrels of crude oil. In March, Europe had already committed to releasing 73 million barrels of refined fuels as part of a 400 million barrel strategic stock draw tied to the conflict in the Middle East. The US has largely completed its share of that programme, but some European countries have not yet met their obligations, according to IEA head Fatih Birol.
Source: FT
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