Emmanuel Macron, the President of France, has invited G7 countries to come together in the coming weeks to discuss the release of emergency oil reserves and coordination at the level of reserves, exports, and production capacity. This request comes in response to the reduction in Saudi crude oil deliveries and the significant increase in diesel prices in Europe.
Current Fuel Supply Situation in Europe
Diesel prices in Europe have risen above $200 per barrel, with retail equivalent costs exceeding $300. This price increase occurs particularly as Russia has imposed restrictions on diesel exports, and oil product exports from the Middle East continue to face limitations. Additionally, Saudi Aramco has informed two European refineries that they will not receive any crude oil under long-term contracts in October.
Need for Releasing Oil Reserves
Macron has also emphasized the necessity of securing diesel, jet fuel, and natural gas for the coming months. Europe's emergency oil reserves, unlike the strategic oil reserves of the United States, include large volumes of final fuels such as gasoline and diesel. This allows Europe to respond quickly to market needs.
Since the start of the war in Ukraine, members of the International Energy Agency (IEA) have released over 300 million barrels from their emergency reserves. However, global inventories remain 507 million barrels below pre-war levels. The re-release of reserves could quickly bring physical barrels and final fuels to Europe, although it cannot resolve issues arising from damage to the Saudi pipeline, the restart of Russian refineries, or the reopening of the Strait of Hormuz.
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