Oil Falls as G7 Taps Emergency Supplies

Diesel prices plunged as G7 countries signaled they would release emergency supplies, aiming to relieve some pressure on consumers who are grappling with soaring energy costs.

European diesel slumped more than 8% before paring losses while US diesel futures fell as much as 5.6% after French President Emmanuel Macron said the G7 will release up to 100 million barrels of crude stocks and diesel. The energy complex slid in tandem, with West Texas Intermediate falling to settle near $91 a barrel.

The development comes as the Trump administration pulls multiple levers to drive down fuel prices. The White House had been pressing the European Union to release stockpiles to help avert a potential ban on diesel exports from the US, which has become the continent's top supplier. On Thursday, Treasury Secretary Scott Bessent urged European partners to make additional supplies available "immediately."

Still, analysts and traders say the latest release may not be enough to offset continued loss in supplies.

"I think it takes away the upside story in diesel, but is not an overwhelming amount of diesel for the market to consume," said Scott Shelton, an energy specialist at TP ICAP Group Plc. "It just helps in balancing the losses from both Russia and Middle East in the near term."

Fuel markets have been flashing signs of distress for several weeks, as diesel supplies in particular have shrunk due to the war in the Middle East and Ukrainian attacks on Russian refineries. Shortages are also bolstering crude demand as refineries try to churn out as many barrels as they can just as consumption rises ahead of the Northern Hemisphere winter.

That helps explain why oil prices have remained elevated above $100 even as Wall Street analysts said earlier this week that crude flows from the region were nearing pre-war levels. Brent jumped on Thursday as the US deployed an additional aircraft carrier and 10,000 more troops to the Gulf. Prices have remained far from their peaks during the war, however, as transits through Hormuz continue.

Saudi Arabia raised oil flows through its key cross-country pipeline to more than 80% of capacity after repairing damage from attacks last month. Wall Street analysts said earlier this week that crude flows from the region were nearing pre-war levels.

"Broadly crude flows are recovering, but the real pressure point has shifted into diesel," said Emily Ashford, head of energy research at Standard Chartered. "Releasing stocks can provide a critical pressure-release valve, but it only buys time and doesn't fix the underlying supply problem."

Oil futures have swung this week as Middle East flows improved but uncertainties loomed as Washington and Tehran failed to make headway toward a lasting peace agreement that would fully reopen Hormuz.

Attention has now shifted to strategic stockpiles, especially as supply buffers have weakened. The US offered a tranche of up to 40 million barrels of oil from its emergency reserve on Tuesday, the final such release as part of a plan agreed with the International Energy Agency earlier in the year. Energy Secretary Chris Wright appeared to swipe at European nations for not doing the same.

"Several European member countries have released only a fraction of the crude oil and petroleum products they pledged," Wright said. "We urge every member country to fulfill its commitments."

To make matters more difficult, Chinese exporters have also canceled some oil-product cargoes slated for export in October, as Asia's top consumer prioritizes domestic supply. Moscow, meanwhile, has further extended a ban on most diesel exports through October.

In the Middle East, the recovery in oil product exports hasn't been as robust for crude. And even as more barrels slip covertly through Hormuz, risks to shipping remain elevated, with several attacks on tankers reported just this week. On Thursday, the UK Maritime Trade Operations said it received a report of a tanker being hit by an unknown projectile while transiting the strait. The extent of the damage and any environmental impact were unclear, it said.

FBI and US Coast Guard investigators have found evidence that hackers accessed the propulsion system of an oil supertanker as it was approaching the Texas coast this summer, according to US officials familiar with the matter.

With energy assets across the region facing attacks in the past month, the US military sent two additional Patriot missile batteries to protect oil and natural gas facilities in Saudi Arabia and Qatar in recent weeks, Axios reported, citing unnamed US government officials and a regional source.

Oil Prices

• WTI for November delivery slid 1.9% to settle at $91.11 a barrel in New York.
  • US diesel futures fell 3% to settle at $4.50 a gallon
• Brent for December settlement fell 0.1% to settle at $102.25 a barrel.