President Donald Trump said on social media on Friday that a Group of Seven release of emergency fuel stocks would begin “immediately”, after having raised the prospect of banning US diesel exports to bring down prices at home.
The shift came as diesel remained near record levels. It reached $6.52 on 22 September, and the national average was $6.37 a gallon on Friday, according to AAA.
France, which holds the rotating G7 presidency, announced the agreement after videoconference talks chaired by President Emmanuel Macron. The group plans to release 100 million barrels of oil and fuel products in the coming weeks, beginning with “substantial” amounts of diesel.
The G7 said it would start “immediately” with a “frontloaded substantial release” of diesel within the next 20 days. The remainder is due to be released over four months.
Macron said: “This common decision and this unity should bring down prices” and “The volumes we're releasing should also add liquidity to the market and bring down prices.”
Trump had previously floated an export ban as a means of lowering domestic diesel prices. The US also pressed European countries, including France and Germany, to use their emergency petroleum reserves, at one point signalling an export ban if they did not comply.
Following the G7 agreement, Trump said he would not restrict foreign diesel sales.
US oil prices went down 2% after the announcement.
The decision arrives as Trump and the Republican Party face pressure over fuel costs ahead of the 3 November midterm elections. An AP-NORC poll found the president's economic approval ratings had reached a new low.
Russia has banned exports because of Ukrainian drone strikes on its refineries.
Michael Lynch, a distinguished fellow at Energy Policy Research Foundation, said a European diesel release might reduce diesel exports from the US. He estimated that could lower US prices by 25-50 cents per gallon after a few weeks.
The administration is also expected to announce a plan on Monday to ease restrictions on red dyed diesel, a tax-exempt fuel usually limited to off-road uses.
Red dyed diesel is chemically identical to on-road diesel, though it is exempt from the 24-cents-per-gallon federal excise tax. It comes from the same national stockpile as conventional on-road fuel, which is at a record seasonal low.
Agriculture Secretary Brooke Rollins wrote on social media Monday that Trump “is taking action to deliver short-term relief for farmers and ranchers, including prioritizing diesel in the release of 100 million barrels of crude oil”.
Trump was due to travel on Monday to Grand Island, Nebraska, where the Republican Party is working to turn out farm-state voters before the November midterm elections.
The G7 action follows an earlier effort in March, when International Energy Agency member countries said they would release 426 million barrels of oil and products to stabilise the oil market.
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