The key facts
- Europe will release 42 million barrels of oil reserves over three months, half of which is diesel
- France is using strategic reserves for the first time to lower prices
- Agreement with Saudi Arabia, Kuwait, UAE, and Bahrain for 300,000 tons of diesel per month
Europe releases reserves onto the market
Europe will release 42 million barrels of oil reserves over the next three months to curb fuel prices. This was announced on Thursday by the French Minister of Economy Roland Lescure prior to the meeting of EU energy ministers in Luxembourg. Half of the volume will be diesel. The decision is part of the G7 agreement, which last month agreed to release up to 100 million barrels—completing the coordinated IEA program of 400 million barrels initiated in March.
France uses strategic reserves for the first time
According to Lescure, the previously announced 10 million barrels of French diesel will enter the market in the coming days, and the effect on prices could be seen as early as next week. The reserves will be sold at cost, which, in his assessment, will reduce prices by 12–18 cents per liter. An advisor to the Ministry of Economy noted that France is using strategic reserves for the first time specifically to lower prices. The minister called the measure a 'short-term relief' and added that if the crisis does not resolve itself, 'we will, of course, keep our options open.' Gas stations were urged to advertise reduced prices starting November 1, and small distributors in remote areas were granted interest-free loans. High energy prices have already triggered protests in France and other European countries.
Strait of Hormuz and Gulf supplies
Meanwhile, France is working on a 'multilateral agreement' to reduce insurance costs for ships passing through the Strait of Hormuz, which, according to Lescure, has been blocked by Iran since the US and Israeli strikes earlier this year; insurance costs remain prohibitively high. 'This crisis has lasted too long. We need to find diplomatic ways to resolve it,' the minister stated. Last week, he accompanied President Emmanuel Macron on a tour of five Gulf countries, including a visit to Abu Dhabi, to secure energy shipments. As a result of the trip, an agreement was reached with Saudi Arabia, Kuwait, the UAE, and Bahrain for 300,000 tons of diesel per month, although the impact on pump prices remains unclear due to fluctuations in the global market. Qatar's promise to sell LNG to France depends on the ability of Qatari tankers to pass through the Strait of Hormuz—the country's only export route.
