The G7 will immediately begin a co-ordinated release of 100mn bl of oil stocks over the next four months, including a substantial diesel release within 20 days, its leaders said today.
The group asked the IEA to monitor the "immediate and full implementation" of stock-release commitments made in March. It said members would carry out the 100mn bl release "in this regard" and while "taking into account commitments that have already been fulfilled".
This indicates the 100mn bl is a portion of the commitments made in March, rather than an additional pledge.
The "frontloaded" diesel release will be carried out by G7 members and partners. The statement did not specify the amount of diesel or how the 100mn bl would be divided between crude and refined products.
G7 members will meet through the IEA in the coming days to discuss additional diesel releases if needed. They will also co-ordinate refinery maintenance schedules to avoid simultaneous shutdowns and temporarily raise refinery utilisation where possible, and will encourage countries with significant refining capacity to increase production of refined products, particularly diesel.
IEA members agreed in March to make 400mn bl of oil available from emergency reserves in response to supply disruption caused by the war in the Middle East. The IEA subsequently put members' planned contributions at 426mn bl, comprising 301mn bl of crude and 125mn bl of oil products.
The IEA will monitor the effect of the stock release and other supply measures on energy security and market stability and report within 20 days. Its report will include recommendations on further action, including replenishing emergency stocks, the G7 said.
The G7 statement today also addresses the possibility of a US diesel export ban. Members pledged not to restrict trade in energy and energy products between G7 countries and called on other producers to avoid bans that could exacerbate market tensions.
The US is considering restricting diesel exports to reduce domestic prices ahead of its midterm elections. The European Commission said earlier today such a ban would undermine its trust in the US as a reliable partner.
EU diesel supplies are stable for now, although prices are high because of tight global markets, the commission said.
Europe has become increasingly dependent on US diesel since Mideast Gulf flows were constrained by the near-closure of the strait of Hormuz and Russia halted diesel exports. The EU, UK and Norway received around 430,000 b/d of US diesel and other gasoil in August, according to Kpler. US supplies have accounted for around 40pc of the region's diesel and gasoil imports on average this year. Any US export ban would intensify competition between Europe, Latin America and other importing regions for alternative supplies.
Some market participants have questioned whether a full ban would be sustainable. Excess diesel would accumulate in the US, potentially forcing refiners to cut crude runs and reducing domestic gasoline production.
The G7 also addressed the wider conflicts behind the disruption to energy markets. It condemned Iran's attacks on neighbouring countries and its disruption of international trade, energy security and the global economy, and called for the immediate and full restoration of navigational rights through the strait of Hormuz.
The group pledged to maintain sanctions against Russia while working with the IEA and other partners to "prevent further spillovers" into fuels, gas and other commodity markets.
