Original Coverage & Source Attribution: oilprice.com
Following pressure from U.S. President Donald Trump, G7 leaders announced on Friday a coordinated release of 100 million barrels of emergency oil stocks through the IEA, to begin immediately and be completed over four months. Previously, Trump threatened to ban U.S. diesel exports in a bid to lower record-high domestic fuel prices ahead of the November 2026 midterm elections, with diesel prices recently surging to all-time highs amid tight supplies. However, Trump later ruled out the export ban hours after the European leaders agreed to the release.
Interestingly, energy markets have only issued a muted response to the developments, with the oil price selloff appearing to lose steam: Brent crude for November delivery was up 0.09% to trade at $100.15 per barrel at 1.05 pm ET on Tuesday after losing nearly 2% on Monday, while WTI crude for October delivery gained 0.10% to change hands at $89.53/bbl. And now commodity analysts at Standard Chartered say that the indifference of oil markets to these developments can be chalked up to the fact that this is not a new emergency action, but rather an acceleration of the original 400 million barrels release the group announced in March shortly after the war in Iran broke out, with a request for the “immediate and full implementation” of those commitments.
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The IEA reported that approx. 325 mb of the 400 mb had already been released as of 2 October, implying that only ~75 mb remained outstanding. Stanchart points out that it’s not yet clear how this reconciles with the G7’s 100 mb figure. Additionally, the precise split between crude oil and diesel has not been disclosed, although the G7 has requested a “front-loaded substantial diesel release within the first 20 days”. Members are also expected to meet through the IEA in the coming days to consider additional diesel releases if necessary, with the IEA mandated to report on the effectiveness of measures within 20 days.
The fuel price spike in the U.S. is showing little signs of abating: the national average price of gasoline ticked higher to $4.3685 per gallon on Tuesday, up from $4.3653/gal on Monday and $4.1473/gal a month ago while diesel was selling at $6.3151 per gallon, up from $5.8970/gal a month ago. European diesel (low-sulphur gasoil) is roughly flat m/m, but 125% higher YTD, while the European diesel crack remains elevated.
As Stanchart has pointed out, the market has known since March that up to 400 mb would be made available. What has changed, however, is the urgency with which governments want the remaining commitments to be delivered, particularly for diesel. This makes the acceleration arguably more important than the headline volume. The commodity analysts have projected that the release can alleviate some near-term pressure, but it’s not enough to address the underlying tightness in refined products, and also does little to resolve the disruptions and capacity constraints that created that tightness in the first place.
Regarding Trump’s promise not to go ahead with the diesel ban, Stanchart notes that this is a political commitment, rather than an immutable legal constraint, implying that a future policy reversal is always possible. Avoiding a U.S. export ban removes a major downside risk to European supply and is arguably as important as the stock release itself, preserving existing supply flows without adding further supply. According to the commodity experts, the U.S. has provided about half of European diesel imports in recent months, highlighting how hard the continent could be hit by even a partial limit on exports.
On global energy flows, we recently reported that oil flows through the Strait of Hormuz remain considerably below pre-war levels despite overall Middle East crude exports having nearly fully recovered. And now Stanchart has reported a similar situation for natural gas, warning that optimism over the recent pick-up in Qatari transit should be tempered with caution.
Qatari LNG vessel traffic through the Strait of Hormuz has increased since mid-September, with a further cluster of laden departures in early October. Stanchart sees this as a positive signal after supply remained extremely limited through the summer following the outbreak of the US-Iran conflict. However, the magnitude is not yet sufficient to support the notion of a meaningful supply recovery, with traffic still far below the pre-war pace. To wit, QatarEnergy has not yet indicated that production volumes are ramping up, and force majeure remains in place.
Stanchart says the combination of laden departures and ballast vessels returning to Qatar points to a more repeatable shipping cycle, rather than the release of previously trapped vessels. However, shipping is only the first stage of a supply recovery. Sustained vessel circulation would still need to translate into a deliberate production ramp-up at Ras Laffan, restored contractual deliveries and the withdrawal of force majeure.
By Alex Kimani for Oilprice.com
