G7 releases 100 million barrels to fight diesel crisis; Saudi offensive against Houthis reported

Global oil markets got a brief reprieve Friday after the G7 nations announced they would release 100 million barrels of crude oil and diesel from emergency reserves over four months — a coordinated move through the International Energy Agency aimed at bringing down fuel prices that have hit record highs amid wars in the Middle East and Ukraine. Crude futures settled modestly lower on the day, but analysts cautioned the market could reverse as early as Monday morning.

The announcement came after a video conference of G7 leaders chaired by French President Emmanuel Macron. In a joint statement, the group — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, with the European Union also represented — said the release would begin immediately and include a 'substantial diesel release within the first 20 days.' The statement also said the group would 'convene in the context of the IEA in the coming days to discuss the possibility of additional diesel releases as necessary' and would coordinate refinery maintenance schedules to prevent simultaneous capacity shutdowns.

Taking into account commitments that have already been fulfilled, we will implement our commitments with a coordinated release through the IEA of 100 million barrels.— G7 Joint Statement

The release comes under pressure from President Donald Trump, who earlier this week threatened to ban US diesel exports and pushed Europe to tap its emergency stocks. Soaring diesel prices have become a political liability for the Trump administration and Republicans ahead of November midterm elections, according to Al Jazeera.

The scale of the diesel crunch is stark. Global diesel prices hit a record high last Friday, with the average US gallon reaching $6.50 — up from $5.61 just a month earlier, according to the American Automobile Association. Three simultaneous disruptions have squeezed supply: the US and Israel's war on Iran has cut off Middle Eastern diesel flows to Europe; Ukraine's attacks on Russian energy infrastructure have halted Russian diesel exports; and China has stopped exporting diesel.

There isn't diesel coming out of the Middle East to Europe, and Europe took quite a lot of diesel from Saudi Arabia and from Kuwait. Russia has now ceased to export diesel at all. And China is no longer exporting diesel.— Neil Atkinson, former head of the IEA's Oil Industry and Markets Division

Atkinson added that demand is unlikely to ease soon, given the ongoing agricultural harvesting season. He said that seven months into the Middle East conflict, global crude oil and product supply 'remains significantly below pre-war levels' — and that the G7 release, while welcome, 'doesn't deal with the fundamental problem.'

The emergency release by G7 members will put some downward pressure on prices, particularly global diesel prices. However, the impact would be short-lived given that this is just a temporary solution to the supply crunch.— Hamad Hussain, climate and commodities economist, Capital Economics

Markets reflected that ambivalence. Brent crude briefly dipped below $100 a barrel after the G7 announcement before recovering to around $102. Naeem Aslam, chief investment officer at Zaye Capital Markets, told Al Jazeera the announcement was 'very much needed' but warned that the structural details — who releases what, and where export bans are lifted — still need to be resolved. He said pressure on prices may ease by Sunday night, but 'going into Monday morning … we could potentially see the reversal in the market.'

Adding a separate layer of geopolitical risk to the energy outlook: reports indicate Saudi Arabia is planning an offensive against Iran-backed Houthi militants in Yemen in the coming weeks, a move aimed at securing Red Sea shipping routes. No confirmation of imminent action has emerged.

The IEA's Executive Director Fatih Birol said earlier this week that member countries had already released about two-thirds of a prior 400-million-barrel agreement, meaning Friday's 100-million-barrel pledge represents a fresh tranche on top of existing commitments. How much each G7 member will contribute has not been disclosed.

We will coordinate maintenance schedules across G7 refineries to prevent simultaneous capacity shutdowns and temporarily increase utilization rates where feasible.— G7 Joint Statement

The G7 also urged members to refrain from imposing export restrictions on energy products among themselves — a notable pledge given that the Trump administration had itself threatened a US diesel export ban just days earlier.

Why it matters — Record diesel prices are hitting consumers, farmers, and freight costs worldwide, and whether the G7's emergency release — or a potential Saudi military move — can stabilise markets will shape energy costs and inflation heading into winter.

Reported by aljazeera.com, reuters.com, seekingalpha.com