European diesel prices could ease in the coming weeks after the Group of Seven agreed to release up to 100 million barrels of crude oil and petroleum products from strategic reserves.
Sarah Raffoul, a senior analyst at Argus Media, said the decision could improve short-term fuel availability and reduce the premium traders have been paying because of concerns over tight supplies.
The release includes an early allocation of diesel, with most of the additional volumes expected to enter the market in October and November. Raffoul said the move could help reduce pressure on diesel supplies at the start of the winter period.
The G7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, while the European Union participates in its meetings. The group addresses major international economic, energy and security issues.
However, the analyst said the intervention would provide only temporary relief because the oil and fuel are coming from existing stockpiles rather than new production. This means the release could improve immediate supply conditions without significantly changing the wider global supply balance.
Other factors could continue to keep the diesel market under pressure. These include unexpected refinery shutdowns in Asia, uncertainty over China’s fuel exports and restrictions affecting Russian diesel supplies.
Europe also depends heavily on imported diesel, making the region vulnerable to disruptions in international trade. European diesel inventories remain low compared with historical levels, while stronger demand for jet fuel has also affected the relationship between jet fuel and diesel prices.
Raffoul said increased refinery activity, changes in China’s export policy and continued stock releases could result in a better-supplied market. However, renewed refinery disruptions, stronger winter demand, weaker exports or delays in rebuilding inventories could cause fuel shortages to worsen once the impact of the strategic stock release fades.
She therefore expects the G7 decision to limit further increases in European diesel prices in the near term, although she cautioned that it does not represent a fundamental improvement in the underlying supply situation.
In Nigeria, diesel prices remain significantly higher, with the fuel selling at almost N2,000 per litre. Diesel is widely used by industries and heavy-duty vehicle operators, making changes in global diesel prices important for businesses facing high energy and transportation costs.
