Oil prices fell after Europe decided to release diesel stocks
Oil prices declined markedly on Friday, October 2, after European countries agreed to release additional diesel fuel reserves. The decision eased market concerns about a shortage of refined products and possible restrictions on U.S. fuel exports.
According to Reuters, by 16:49 GMT Brent futures were down $1.80, or 1.76%, to $100.50 per barrel. U.S. WTI was down $2.02, or 2.18%, to $90.85 per barrel. Earlier in the day the drop was sharper: Brent fell below the psychological $100 mark.
The main reason for the sell-off was the European countries' decision to use part of their diesel reserves. Prior to that, EU governments had discussed a French proposal to release about 50 million barrels of diesel in Europe and another 50 million barrels of crude oil by International Energy Agency countries.
Later, G7 leaders officially agreed on a coordinated release through the IEA totaling 100 million barrels of oil and refined products over four months. A significant portion of the diesel stocks is to be brought to the market at an accelerated pace — within the first 20 days.
The market is particularly acutely feeling a shortage of diesel fuel itself. European gasoil futures, which serve as a benchmark for diesel prices, fell more than 4% during trading to about $1,387 per tonne.
Pressure on European governments intensified after U.S. President Donald Trump said he might consider restricting U.S. diesel exports. Such a move could have hurt the European market especially hard, as it depends on imports of refined products from the United States.
Following the G7 agreement, participants also committed not to impose restrictions on mutual energy exports. This reduced the likelihood of a U.S. ban and was an additional factor pushing prices lower.
The current shortage of refined products is not only linked to the situation in the Middle East. Problems were compounded by lower regional refining runs, disruptions at Russian refineries, and restrictions on refined product exports from China.
The International Energy Agency had earlier noted that diesel has become the tightest segment of the global oil market. In August, combined diesel exports from Gulf countries and Russia were about 1.6 million barrels per day below pre-war February levels.
Meanwhile, the fundamental situation remains tense. Despite a gradual recovery in oil supplies from the Middle East, global inventories continue to shrink and refinery capacity is operating at high utilization rates.
Against this backdrop, Barclays analysts raised their forecast for the average Brent price in the fourth quarter to $115 per barrel and their forecast for the whole of 2026 to $100. This suggests that the market still views the current slide as a reaction to additional supply from reserves, rather than the end of the energy crisis.
Sources: Reuters, G7 / Élysée Palace, IEA
