Brent crude oil has rebounded to $100 per barrel; U.S. and European government bond yields continue rising; the U.S. is pressuring France and Germany to release 120 million barrels of diesel reserves—how should we interpret the current market situation?

The pricing power in this round of market moves has shifted squarely into the White House. On the evening of October 1, Brent crude oil surged back above $100 per barrel; UK 30-year government bond yields hit 6%, the highest since 1998; and U.S. 10-year Treasury yields simultaneously reached a more than 20-year high. The European STOXX Index fell back to mid-June levels. Simultaneously, the U.S. explicitly named France and Germany, demanding that the EU deliver 120 million barrels of diesel reserves within six months—and issued an implicit threat: if they refused, the U.S. would restrict diesel exports to Europe. Nasdaq futures promptly erased most of their prior gains. The next day, the G7 held a video summit; President Macron announced that up to 100 million barrels of emergency oil reserves would be released via the International Energy Agency (IEA), with the initial phase focused heavily on diesel. In response, WTI crude oil plunged over 4%, while European equities turned positive. The key to this reversal lies in supply dependency structure. Russia’s refined fuel exports have been banned, and the Middle East conflict has halved regional diesel exports—deliveries to Europe dropped to just 110,000 barrels per day in late September, the lowest since 2020. U.S.-sourced diesel now accounts for double its share of EU diesel imports compared to a year ago; in Northwest Europe, U.S. diesel already makes up over half the total.

The G7 has decided to release 100 million barrels of emergency oil reserves, with large-scale diesel releases concentrated in the first 20 days—WTI crude oil briefly fell over 5%.

Amid tightening global energy supply and persistently high diesel prices, the Group of Seven (G7) has finally rolled out a large-scale strategic petroleum reserve (SPR) release measure. On Friday, October 2, the French Presidency released a joint statement by G7 leaders stating that the G7 will coordinate—through the International Energy Agency (IEA)—the release of 100 million barrels of strategic oil reserves. The action will begin ‘immediately’ and continue over four months. During this period, G7 members and partner countries will prioritize large-scale diesel reserve releases in the first 20 days. The G7 also pledged to avoid imposing energy or energy-product export restrictions among themselves and called on other oil-producing nations not to adopt export bans that could further exacerbate market tensions. Following the announcement of this G7 decision, international crude oil futures posted markedly wider losses during Friday’s U.S. pre-market session. At one point, U.S. WTI crude dipped below $88.10 per barrel—a decline of nearly 5.2% on the day—while Brent crude fell below $98.50 per barrel, down nearly 3.8% intraday. Earlier that Friday, crude oil had already weakened under pressure from market expectations of additional SPR releases. Front-loaded diesel releases in the first 20 days; G7 members commit to avoiding energy export restrictions According to the G7 leaders’ statement published by the French Presidency, the core of this initiative is the IEA-coordinated release of a total of 100 million barrels of strategic petroleum reserves, scheduled to launch immediately and conclude within four months. Notably, the G7 placed special emphasis on diesel supply. The G7 leaders’ statement specified that member countries and partners would conduct a ‘large-scale, front-loaded’ release of diesel reserves during the initial 20-day period. Furthermore, the G7 pledged to continue discussions—via the IEA—in the coming days on whether additional diesel reserve releases may be necessary. The G7 also tasked the IEA with monitoring the impact of these measures on energy security and market stability, and required the agency to submit a follow-up report—including concrete recommendations for replenishing strategic reserves—within 20 days. French President Emmanuel Macron told reporters after the meeting that the G7 aims to lower fuel prices through this action. Another critical component of this measure is the commitment to avoid export restrictions. The G7 reaffirmed that no member country will impose energy or energy-product export restrictions on fellow members, and urged other oil-producing nations to refrain from adopting embargoes that could further tighten markets. This distinguishes the current G7 action from simple crude-oil inventory releases: today’s market stress stems not only from crude oil shortages but also—more acutely—from tight supplies of refined products like diesel. Market had already priced in ‘reserve release’ expectations ahead of the official announcement In fact, earlier on Friday, international oil prices had already declined amid reports that the G7 might release additional strategic reserves. According to Reuters, EU countries earlier that day discussed a proposal put forward by France: European nations would release 50 million barrels of diesel reserves, while IEA member countries would concurrently release another 50 million barrels of crude oil. This discussion occurred ahead of the G7 leaders’ video summit. The backdrop to this proposal was sustained U.S. pressure on Europe to release more emergency fuel reserves to ease soaring fuel prices. Reuters previously reported that the U.S. government had pressured France and Germany to release emergency diesel inventories—and even considered restricting U.S. diesel exports as a further lever of pressure.

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The US urged European allies to immediately release strategic diesel reserves to curb prices driven by Middle East tensions. President Trump threatened an export ban, prompting EU discussions on coordinated supply measures amid soaring fuel costs.

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