G7 Reserve Release Sends Oil Prices Lower Amid Diesel Supply Tightness

Oil prices dropped sharply on Friday after G7 members announced a coordinated release of 100 million barrels of oil and diesel from strategic reserves through the International Energy Agency over four months.

Brent crude, the international benchmark, briefly fell below $100 per barrel before stabilising at around $102. US oil prices declined by as much as five per cent following the announcement.

Reserve release targets supply concerns

The planned release is intended to ease supply concerns that had pushed prices higher. The announcement comes as crude exports from the Middle East have been returning towards near pre-war levels in recent weeks, while supplies of fuels such as diesel have remained tight.

According to the report, refinery facilities were damaged during the conflict, limiting the availability of refined fuels even as crude exports began to recover. The G7 announcement did not specify how the 100 million barrels would be divided between oil and diesel, or provide an exact schedule for the four-month operation.

Pressure on the European Union

The measures followed pressure from US President Donald Trump for the European Union to draw on its strategic diesel reserves. The report said the pressure included a warning that the United States could impose a ban on diesel exports if the reserves were not tapped.

The individual G7 members involved in the announcement were not identified. The coordinated action will be conducted through the International Energy Agency, which is responsible for coordinating the release over the stated period.

Despite the fall in crude prices, the continued damage to refineries means fuel supply conditions, particularly for diesel, remain a concern.