The U.S. Administration has urged Germany and France, Europe’s largest economies that hold a sizeable chunk of the EU’s emergency reserves, to release diesel from emergency stockpiles or face a potential U.S. diesel export ban, sources close to the discussions told Reuters on Thursday.
Since crude oil prices jumped again in September to above $100 per barrel and the global fuel markets, especially for diesel, continued to tighten, diesel prices hit record highs in many countries, including in the United States.
The U.S. Administration has not ruled out yet a potential ban on diesel exports, although President Trump on Wednesday appeared to be less inclined to resort to the move than a few days ago.
The President told reporters in the Oval Office that he and the Administration continue to discuss the pros and cons of a diesel export ban every day, “but it just seems that it would have a negative impact on gasoline.”
President Trump has not yet ruled out the idea that emerged last month as retail diesel prices in the United States hit $6 per gallon nationwide average for the first time ever, and then $6.50 a gallon.
The Administration, however, is looking at other ways to ease the diesel crunch, including by pressuring Europe into releasing diesel from emergency stocks.
Combined, Germany and France hold about 35% of the EU’s strategic diesel reserves. The EU is estimated to hold about 39 million tons of diesel, which is equivalent to more than two months’ consumption of the bloc.
The U.S. is pressuring European countries that haven’t released all the emergency stocks pledged under the IEA-led stock drawdown in the early weeks of the Iran war to do so now.
At the same Oval Office briefing with reporters, U.S. Energy Secretary Chris Wright said that “you will hear announcements from our friends in Europe about new diesel supplies that’ll come to the market. That’ll meaningfully push diesel prices down.”
Earlier this week, Wright said, “While the United States and Japan are delivering on their commitments, several European member countries have released only a fraction of the crude oil and petroleum products they pledged. We urge every member country to fulfill its commitments.”
By Charles Kennedy for Oilprice.com
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