New Delhi: The Group of Seven (G7) nations, along with the European Union, have agreed to release 100 million barrels of oil and petroleum products from emergency reserves as a global energy supply crisis pushes fuel prices sharply higher. The move, coordinated through the International Energy Agency (IEA), is aimed particularly at easing pressure on diesel markets affected by disruptions linked to the Iran war, the Strait of Hormuz crisis and attacks on Russian refineries.
The release is scheduled to begin immediately and continue for four months. A substantial portion of the diesel stocks will be released during the first 20 days in an effort to address the most immediate supply pressures. The decision follows intense pressure from the US administration for European countries to make more fuel available rather than allowing Washington to impose restrictions on diesel exports.
The G7 comprises France, Canada, Germany, Italy, Japan, the United Kingdom and the United States. France currently holds the group’s presidency, while the European Union also participates in G7 discussions.
Why the G7 is releasing emergency fuel stocks
The decision comes at a time when global energy markets are facing severe supply disruptions. The conflict involving Iran and the disruption of shipping through the Strait of Hormuz have placed particular pressure on refined petroleum products.
The IEA said the impact of the Hormuz crisis remains especially severe in diesel markets. Although crude oil exports from the Middle East have recovered to some extent, refined-product flows remain heavily constrained. Ukrainian attacks on Russian refineries have further reduced the availability of diesel in international markets.
The Strait of Hormuz is one of the world’s most important energy routes. The IEA has estimated that around 15 million barrels of crude oil and 5 million barrels of oil products normally pass through the waterway each day. The near halt in traffic through the strait has therefore created a major disruption to global energy supplies.
With diesel supplies particularly tight, governments are concerned about the impact on transport, agriculture, industry and household energy costs.
Diesel prices reach record levels
The emergency release comes after diesel prices surged in major markets.
In the United States, average diesel prices stood at $6.37 per gallon on Friday, according to the NDTV Profit report. The sharp increase has intensified pressure on the US administration to take measures to bring fuel costs down.
Diesel is particularly important to the wider economy because it powers a large share of commercial transport, heavy machinery, agriculture and industrial activity. A prolonged increase in diesel prices can therefore feed into the cost of transporting food, manufactured goods and other commodities.
The IEA’s September Oil Market Report highlighted the severity of the diesel squeeze. It said US diesel prices had crossed $200 per barrel in early September, around 94% above pre-war levels, while European and Asian markets were also experiencing substantial price pressure.
The current crisis is consequently not simply a problem for motorists. Higher diesel prices can increase costs throughout supply chains and contribute to broader inflationary pressures.
Trump administration pushed for reserve release
US President Donald Trump had been pressing European countries to release diesel from their emergency stocks.
The pressure came as fuel prices rose and concerns grew about potential shortages. The Trump administration had also considered an export ban on US diesel as a way of protecting domestic supplies and controlling prices. The G7 reserve-release agreement provided an alternative to such a measure.
Trump said Europe had agreed to release a large quantity of diesel from its stocks shortly before the G7 announcement.
US Treasury Secretary Scott Bessent had also urged European partners to accelerate existing commitments and make additional supplies available immediately to address ongoing disruptions.
The agreement therefore represents a coordinated response designed to increase fuel availability without resorting to new export restrictions.
G7 members agree to avoid export restrictions
The G7 leaders also agreed to refrain from imposing export restrictions on energy and energy products among the participating countries.
In their joint statement, the leaders called on producers to avoid bans that could further increase tensions in energy markets. The objective is to prevent governments from responding individually to shortages in ways that could worsen the global supply situation.
Such coordination is important because energy markets are highly interconnected. Restrictions by major suppliers can quickly affect prices and availability in other regions.
The G7’s approach is therefore focused on increasing supply, maintaining international trade in energy products and using strategic reserves to address the immediate shortage.
IEA has already released hundreds of millions of barrels
The latest G7 decision is not the first major emergency stock release during the current energy crisis.
The IEA said on October 2 that about 325 million barrels out of the 400 million barrels pledged under its March collective action had already been released. That represents more than 80% of the original commitment. The agency said those releases had played an important role in filling the supply gap and reassuring markets.
The additional 100-million-barrel G7 action demonstrates the continuing severity of the disruption.
The IEA said the current pressure is different from a conventional crude oil shortage because refined products, particularly diesel, are facing much tighter conditions. Middle Eastern refined-product exports have been significantly affected, while damage to Russian refining capacity has compounded the problem.
Why diesel is at the centre of the crisis
Diesel has become one of the most vulnerable parts of the global energy market.
The fuel is widely used by trucks, ships, construction equipment, agricultural machinery and industrial facilities. Unlike petrol, diesel is also closely tied to commercial activity and food production.
The IEA reported that diesel and gasoil account for nearly 30% of global oil demand. At the same time, net exports of diesel and gasoil from Gulf countries fell sharply as shipments through the Strait of Hormuz were disrupted.
Russia’s refining disruptions have added another layer of pressure. Ukrainian attacks on Russian refineries have reduced production and exports, creating a shortage at a time when global inventories are already under strain.
This combination of supply disruptions explains why governments are prioritising diesel in the emergency reserve release.
What the 100-million-barrel release could achieve
The immediate objective of the release is to increase the amount of fuel available in international markets and reduce extreme price pressure.
The G7 has decided that the release will be front-loaded, meaning a significant quantity will enter the market during the first 20 days. This is intended to provide rapid relief rather than spreading the entire volume evenly over four months.
The move has already been welcomed by energy market participants. IEA Executive Director Fatih Birol said oil prices had begun to fall following the announcement, with prices dropping by around $5 after the reserve-release decision.
However, emergency reserves can only provide temporary relief. The longer-term solution will depend on the restoration of normal oil and refined-product flows, particularly through the Strait of Hormuz.
More releases could follow
The G7 has left the door open for further action.
The member countries said they would meet again in the context of the IEA in the coming days to discuss whether additional diesel releases may be necessary.
This is significant because the energy situation remains uncertain. Even if the immediate shortage eases, continued disruptions in the Middle East or further attacks on refining infrastructure could create another supply squeeze.
The IEA has also indicated that it is prepared to support additional measures if market conditions require them.
For countries heavily dependent on imported fuel, the outcome of these discussions could have significant economic implications.
Impact on India and the global economy
India is among the world’s major oil-importing economies, making global energy prices particularly important for the country’s inflation, trade balance and transport costs.
Any sustained decline in international diesel and crude prices could reduce pressure on India’s import bill and help moderate fuel-related costs across industries. Conversely, a prolonged energy shock could increase transportation and production expenses.
The effects could also extend to food prices because diesel is heavily used in agriculture and logistics. Higher fuel costs can increase the expense of moving agricultural produce from farms to markets and consumers.
For the global economy, the current crisis presents a similar challenge. Higher energy prices can increase inflation while simultaneously weakening economic growth by raising costs for businesses and households.
Energy security remains the bigger challenge
The G7’s decision to release 100 million barrels highlights the scale of the current energy shock. It is also a reminder of the importance of strategic fuel reserves during geopolitical crises.
The emergency stocks can help bridge temporary supply gaps, but they cannot permanently replace normal production and trade. The IEA has repeatedly stressed that restoring safe and reliable movement through the Strait of Hormuz remains the most important step towards stabilising global oil markets.
For now, the G7 is betting that a rapid injection of diesel and other petroleum products can cool prices and reassure markets.
The coming weeks will show whether the 100-million-barrel release is sufficient to ease the diesel shortage or whether governments will have to open their reserves further. With the IEA already monitoring the situation and the G7 preparing for another review, global energy markets are likely to remain closely tied to developments in the Middle East and Russia for the foreseeable future.