The G7 group has announced the release of 100 million barrels of its oil reserves over the next four months, aiming to respond to the existing pressures on the fuel market. This decision includes a significant release of diesel in the first 20 days of this period. Analysts say that this action is merely a temporary solution to the existing problems in the fuel market.
Price Reductions in the Market
Crude oil prices and midstream gaps decreased last week. The price of U.S. crude oil (WTI) has reached around $90 per barrel, and the prices of gasoline and diesel have also decreased in recent days. Some states have also suspended taxes on motor fuels until the end of the fiscal year. This reaction to the release of oil reserves indicates that market participants are focused on the immediate impact of increased diesel supply in the short term.
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Concerns About Supply Shortages
However, analysts warn that this action is only a temporary solution. If the market realizes that these new reserves lead to further reductions in inventories in the event of new crises, concerns about supply shortages will return to the forefront. Experts say that if product flows from the Middle East remain limited, this 100 million barrels will only be a temporary measure.
The CEO of Aramco has also warned that oil inventories have become "alarmingly thin." The reduction of oil and diesel reserves, in a situation where replenishing these reserves is not possible, will make the fuel market significantly more vulnerable.
Supply Challenges from the Middle East and Russia
Fuel supply from the Middle East remains limited, especially considering that Russia has extended its ban on diesel and marine fuel exports until October 31. This ban means that the global market will have to cope without Russian diesel exports for another month. Additionally, China has halted fuel exports to maintain its domestic market supply, which will put further pressure on the fuel market.
Analysts believe that improvements in trade flows and production at refineries are essential, and if supply from the Middle East, Russia, and China becomes limited again, the fuel market will remain in deficit until 2027.
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