G7 plan to release 100 million barrels of diesel won't lower prices at the pump, experts say

Under pressure from the United States, the Group of Seven (G7) countries are preparing to release 100 million barrels of diesel fuel and crude oil from their strategic reserves to ease pressure on global energy supplies. However, industry representatives say the move is unlikely to bring down diesel prices at filling stations.

Notably, the 100 million barrels are not additional to the 400 million barrels that member states of the International Energy Agency, including Estonia, committed to releasing over four months back in March. That commitment was never fully met — 325 million barrels have been used so far, leaving 75 million still to be released onto the market. Whether another 25 million will be added on top to reach the full 100 million remains unclear.

Estonia's position

Estonia's Ministry of Climate says the country currently has sufficient fuel reserves, equivalent to about 83 days of consumption against a 90-day requirement. No specific proposal for an additional release of Estonia's strategic reserves has been received so far. In spring, following a proposal from the International Energy Agency, Estonia already released around 31,000 tonnes of fuel from its reserves. Should a new proposal arrive, the country will decide separately on the volume that would be optimal for it.

Supply and price outlook

Although crude oil supplies from the Middle East have recovered to about 80% of previous levels, reduced refining capacity has caused fuel shortages and driven up refining costs. The situation with finished petroleum products is even more difficult, with the market still experiencing a serious shortage.

Releasing reserves onto the market would ease the shortage, but diesel at the pump will remain expensive. Last week's record-high prices have eased slightly but remain roughly as high as in the first half of September. With winter approaching, fuel consumption will rise as the heating season begins, so a significant price drop is unlikely until the conflict around the Strait of Hormuz is resolved.