G7’s 100-million-barrel release faces a diesel shortage reserves alone cannot fix

Farmers face a double squeeze: diesel for their machinery is becoming more expensive just as fertiliser prices rise. That pressure helps explain why the G7’s planned release of 100 million barrels of crude oil and diesel matters far beyond filling stations. According to Al Jazeera, the emergency intervention aims to lower energy prices, but industry specialists warn that drawing down reserves cannot repair the underlying disruption to supplies.

The Group of Seven major economies said it would coordinate the release through the International Energy Agency, or IEA. Deliveries are to begin immediately and continue for four months, with a substantial diesel release within the first 20 days. The amounts each country will contribute, and the split between crude and diesel, remain unclear. The IEA’s executive director, Fatih Birol, had earlier said members had already released about two-thirds of a separate 400-million-barrel commitment.

The announcement brought only brief relief to crude prices. Brent, the international oil benchmark, dipped below $100 a barrel before recovering to about $102 that evening, Al Jazeera reported. Oil had risen by more than $4 a barrel on Thursday. Diesel prices cited by the American Automobile Association reached $6.50 a gallon last Friday, compared with $5.61 a month earlier.

Why diesel is the bottleneck

The US and Israel’s war on Iran has disrupted energy exports from the Gulf, while Ukrainian attacks on Russian energy facilities have further strained supplies. Neil Atkinson, a former head of the IEA’s Oil Industry and Markets Division, told Al Jazeera that Europe was missing diesel shipments from Saudi Arabia and Kuwait. Russia had also stopped exporting diesel because of attacks on its refineries, he said, while the agricultural harvesting season was keeping demand high.

Atkinson welcomed the reserve release but said it left the central supply problem unresolved. Seven months into the Middle East war, he said, global crude and petroleum-product supplies remained well below their pre-war levels.

Atkinson’s warning: emergency fuel releases do not resolve the underlying shortfall in global supply.

The consequences reach across the economy. Frederic Schneider, a nonresident senior fellow at the Middle East Council on Global Affairs, told Al Jazeera that diesel powers trucks, ships, farm machinery, mining equipment and backup generators. Higher costs therefore spread into food, construction materials and delivered goods. Farmers also face more expensive fertiliser, with both increases linked to the closure of the Strait of Hormuz. Schneider said this combination risks stagflation—rising prices alongside weaker economic activity—and complicates central banks’ interest-rate decisions.

Export policy becomes the next test

The G7 also plans to coordinate refinery maintenance to avoid simultaneous shutdowns and raise operating rates where possible. It urged members not to restrict energy exports to one another. That followed pressure from President Donald Trump’s administration on Europe to tap emergency diesel stocks and a threat to ban US diesel exports. On Friday, Trump said Washington would not impose that ban.

That decision matters because the United States is the world’s largest diesel producer and exporter, according to JODI and OPEC figures cited by Al Jazeera. Its exports total about 1.26 million barrels a day. Naeem Aslam, chief investment officer at Zaye Capital Markets, said the release was needed, but the details of who supplies the fuel and how restrictions are handled would shape the market response.

The next tests are delivery volumes and further action on diesel. G7 countries plan discussions through the IEA in the coming days about additional releases. Reuters also reported, citing two people familiar with the process, that the White House was preparing an executive order on high US diesel prices that could appear as early as next week.