The European Commission held a conference call on October 1 with France, Germany, Italy, Ireland and the United Kingdom to discuss the possibility of releasing strategic diesel reserves.

The United States is pressing Europe to increase diesel supply and has threatened to restrict diesel exports as a potential measure. Participants in the call sought a unified response and agreed to place any decision on releasing reserves under International Energy Agency coordination.

Europe Seeks a Unified Response as the US Demands More Diesel Supply

According to European officials familiar with the discussions, France, Germany, the UK, Italy and Ireland are all facing US pressure to tap their diesel reserves.

The coordination direction that emerged from the October 1 meeting included: responding to the US with a unified position, referring the decision on reserve releases to the International Energy Agency level, and easing tensions in communications with Washington.

European Commission spokesperson Anna-Kaisa Itkonen said the Commission is coordinating closely with Ireland, which holds the rotating presidency of the EU Council, and other member states to assess market conditions and examine measures to address high fuel prices. She noted that any decision to release EU strategic reserves would involve the International Energy Agency.

US Energy Secretary Chris Wright said on September 30 that the US and Europe are working on plans to lower diesel prices and that Europe is expected to announce increased supply to help push prices down. Wright had previously opposed a full ban on diesel exports; Trump said he is still considering whether to impose export restrictions.

Supply Temporarily Stable, but Diesel Prices and Commercial Stocks Remain Under Pressure

Two days before the talks, the EU oil coordination group had just completed a market assessment.

The European Commission said on September 29 that EU oil supply remains temporarily stable, but high diesel and jet fuel prices reflect tight global market supply.

Inventory and refinery operations also point to market strain. Commercial stocks at the Amsterdam-Rotterdam-Antwerp hub are below the five-year average, though they have been relatively stable in recent weeks. European refineries are running near full capacity and are responding to market demand by raising output.

European consumers bear higher diesel costs than those in the US. An October 1 report citing European Commission data said the average EU diesel price was about $9.53 per US gallon, while the US average was about $6.39 over the same period, according to AAA.

The European Commission also said the latest statistics show emergency oil reserves remain at a relatively high level and can be used if market supply is disrupted. Low commercial stocks and ample emergency reserves reflect day-to-day market supply and crisis response capacity respectively.

Reserve Releases Must Be Coordinated, Price Relief May Be Limited

Under the EU oil reserve system, member states must hold emergency reserves of crude oil and petroleum products equivalent to at least 90 days of net imports or 61 days of consumption, whichever is higher.

This requirement applies to overall oil reserves and does not require each country to store 90 days of diesel individually. In the event of a supply crisis, the European Commission is responsible for organizing consultations among member states. Except in extremely urgent situations, countries should draw on reserves after consultations; the EU system also includes a coordination mechanism linked to the International Energy Agency reserve system.

The International Energy Agency has already organized one large-scale joint action this year. On March 11, 32 member states agreed to make 400 million barrels of emergency oil reserves available to the market in response to supply disruptions caused by the war in the Middle East, with specific release arrangements carried out according to each country's circumstances.

Releasing diesel reserves can increase supply in the short term, but the effect also depends on sustained supply and demand conditions. Rebecca Babin, a senior equity trader at CIBC Private Wealth, believes that the price relief from a European emergency reserve release may be temporary, with the main impact felt in Europe: lower prices could restore some previously suppressed demand, and the released inventories will eventually need to be replenished.