Source: Sharecast
Prices have soared this year, trading as high as $200 a barrel in recent weeks, after the US-Iran war hit refineries worldwide and Russia banned exports as part of its war with Ukraine. China has also recently announced a limit on fuel exports.
Further adding to the pressure, Trump – who is currently campaigning ahead of November’s mid-term elections – has threatened a ban on exports of US diesel.
The UK imports around 55% of its diesel, over half of which comes from the US.
However, it was widely reported on Friday that European leaders had been in discussions about releasing 50m barrels of diesel, sending prices sharply lower, to around $185 a barrel. It came a day after Trump demanded European countries release their reserves, with Treasury secretary Scott Bessant insisting American “farmers, truckers and businesses should not be left carrying the burden” of higher prices.
According to the Financial Times, citing unnamed diplomats, Washington is demanding 100m barrels be released, but Brussels is currently considering France’s 50m counter proposal.
Reuters added that EU leaders are also keen to ensure that any release should include a US commitment to avoid any unilateral diesel export ban.
G7 leaders are expected to discuss the issue further on Friday afternoon.
EU countries hold around 109mm tonnes of emergency crude and fuel stocks, SP Angel noted.
Rabobank said: “Diesel markets remain stressed after Russia extended its diesel export ban through October, further tightening global supply ahead of the northern hemisphere winter.
“Over the past two weeks, the Trump administration has considered a US diesel export ban to redirect supply into the domestic market and briefly ease prices. We see little structural benefit: the real constraint is an exceptionally tight global distillate market following widespread refiner disruption. Any initial US price decline could therefore reverse as refineries cut runs, affecting products beyond diesel.”