European diesel prices may come under pressure in the near term following the decision by the Group of Seven to release up to 100 million barrels of crude oil and petroleum products from strategic stocks, an analyst at Argus Media has said.
The G7 comprises Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, with the European Union also participating in the group’s meetings. The group focuses on major global economic, energy, security and international issues.
Senior analyst at Argus Media, Sarah Raffoul, said the coordinated release, which includes a front-loaded diesel release, is likely to ease immediate supply concerns and weaken risk premiums as additional barrels become available during the early part of the winter season.
“The measure is likely to reduce prompt market tightness and weaken risk premiums as additional barrels become available during the early part of the winter season, although the final breakdown between crude and products has yet to be disclosed,” she said.
According to Raffoul, the impact is expected to be felt mostly in October and November, when most of the released volumes are likely to reach the market.
She said the announcement also reduces concerns over export restrictions and includes commitments to maximise refinery utilisation, further improving confidence in near-term diesel availability.
However, Raffoul said the release does not fundamentally change the broader supply outlook because the additional barrels are being drawn from existing inventories rather than new production.
