U.S. crude oil (WTI) fell by 3.78% on Friday, reaching $89.36 per barrel. This price drop occurred following news regarding the potential release of emergency oil reserves by the European Union under pressure from the U.S. government. Meanwhile, Brent crude prices also fell below $100, reaching $99.79 per barrel, indicating a decrease of 2.46%.
Pressure on the Oil Market and Its Reasons
The price drop followed reports of discussions among European governments about releasing emergency oil reserves to address global fuel shortages. European Energy Commissioner, Dan Jørgensen, stated in an interview that these discussions aim to assess the right timing for releasing reserves, and this action could be seen as one of the opportunities to control prices. He emphasized, "We have done this before and will likely do it again. Releasing oil from strategic reserves to control high prices is a possibility."
Market Developments and Their Impacts
As U.S. pressures have intensified, the European Commission contacted several countries, including the UK, on Thursday to explore various scenarios. The U.S. government has urged Germany and France, the largest economies in the EU holding a significant portion of Europe's emergency reserves, to release diesel from emergency reserves or face the possibility of a diesel export ban to the U.S.
Since crude oil prices rose above $100 per barrel in September and the global fuel market, particularly for diesel, has tightened, diesel prices in many countries, including the U.S., have reached their highest levels. Germany and France alone hold about 35% of the EU's strategic diesel reserves, and the EU has approximately 39 million tons of diesel stored, equivalent to more than two months of consumption for the bloc.
The U.S. has urged European countries that have not yet released all their emergency reserves, which were agreed upon early in the Iran war, to do so promptly. Earlier this week, U.S. Energy Secretary Chris Wright stated, "While the U.S. and Japan are meeting their commitments, several European countries have only released part of the crude oil and petroleum products they promised. We urge every member country to fulfill their commitments."
Read more: One Percent Decrease in Oil Prices Due to Increase in U.S. Reserves
