Europe will release 42 million barrels of emergency oil stocks over the next three months, half of it diesel, as governments try to bring down fuel prices before winter, French Economy Minister Roland Lescure said Thursday.
France’s share includes 10 million barrels of diesel, which Lescure said will begin reaching the market in the coming days. The fuel will be supplied at cost, with Lescure forecasting a reduction of 12 to 18 cents per liter. He expects prices to respond as early as next week.
The broader European release averages roughly 460,000 barrels per day over three months, 230,000 bpd of which is diesel. This is part of the G7’s October agreement to release up to 100 million barrels of crude and fuel stocks over a four-month span, which counts toward the 400-million-barrel emergency release coordinated by the International Energy Agency, rather than an additional round of stockpile draws.
Europe consumes more diesel than it refines, and Middle Eastern refinery damage and Russian export restrictions have removed supplies from a market already paying record prices for the fuel. European diesel futures exceeded $200 per barrel in September. Higher crude shipments from the Persian Gulf have not delivered a comparable recovery in finished fuel exports.
European policymakers are also revisiting their refinery strategy, which for two decades largely involved closing refineries. EU Energy Commissioner Dan Jorgensen called those closures a mistake Wednesday, ahead of Thursday’s meeting of energy ministers in Luxembourg. One proposal would ease technical requirements to let remaining plants increase output.
The latest release comes after months of unusually large inventory draws. Industry executives warned in early October that global oil stocks had been depleted to the point that another major supply disruption could send prices sharply higher. Europe’s emergency reserves can put diesel on the market immediately, but domestic refinery capacity remains insufficient to meet demand, leaving the continent dependent on imported fuel.
By Julianne Geiger for Oilprice.com
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