G7 draws 100 million barrels, diesel first, with Hormuz still shut

G7 leaders agreed on Friday to release 100 million barrels of crude oil and diesel from emergency stocks, coordinated through the International Energy Agency, after diesel prices hit records and Washington dropped a threat to restrict US diesel exports.

The release starts immediately and runs over four months. A substantial share of diesel is to be front-loaded in the first 20 days. The statement, issued from the office of French President Emmanuel Macron, who chaired the video call, did not say how the 100 million barrels split between diesel and crude, or which members would put up which volumes. It said further diesel releases could be considered. The G7 also agreed to coordinate refinery maintenance, to push utilisation higher, and to avoid restricting energy exports among members. The IEA is to deliver a follow-up report within 20 days.

IEA executive director Fatih Birol, speaking in Istanbul, said the agency still had stocks if this release did not calm prices. He called the energy shock from the Iran war the largest the agency has faced. He also put a number on what has already left the reserve system. About 325 million barrels have been released under the collective action announced in March, more than 80 percent of the 400 million barrels originally pledged. That March action was already the largest in the IEA's history. Friday's 100 million sits on top of it.

Why diesel, not just crude

The shortage that forced the call is refined product, not only barrels in the ground. Net diesel and gasoil exports from Gulf producers are running at a little more than a quarter of the level before the US-Iran war, Birol said, because flows through the Strait of Hormuz remain severely constrained. Ships have been anchored off Khasab in Oman's Musandam governorate, at the Strait, unable to complete the passage. Ukrainian strikes on Russian refineries have hit a second diesel source at the same time. Europe, which took about half of its diesel imports from the United States in the agency's accounting, has felt that double cut. European diesel prices have doubled since the end of February. The US national average retail diesel price hit a record on Thursday.

The European Commission has put the extra import bill from the disruption near 100 billion euros. Wood Mackenzie's Alan Gelder estimated that a large reserve release could take 20 to 30 dollars a barrel off wholesale product prices. That is an estimate, not a market print. It depends on how much of the 100 million is actually diesel, and how fast it reaches terminals.

The argument that produced the deal

The Trump administration had pressed European governments to draw diesel stocks and had warned of US export limits if they did not. Hours before the G7 call, the Commission rejected that prospect, saying a US diesel export ban would help neither side and would damage trust. The agreement that came out of the call includes a commitment not to restrict energy exports among members. In parallel, Trump dropped the threatened ban. The 100 million barrels are the price of that drop, as well as a response to Hormuz.

Birol was explicit about the limit. Stocks can bridge a gap. They do not reopen a strait. Iran's parliament speaker, Mohammad Bagher Qalibaf, said on Sunday that Hormuz stays shut until seven conditions in a June memorandum are met. As long as that position holds, Friday's release is a timed draw on inventories that took years to fill. The IEA's own arithmetic shows the scale: 325 million barrels already out since March, 100 million more authorised, and Gulf diesel exports still near a quarter of the pre-war rate.

What the next 20 days will show

The test is narrow. If diesel is front-loaded and arrives at European and Asian terminals inside three weeks, wholesale prices should ease by something close to Gelder's range, or they should not. The IEA report due inside 20 days is the document that will say which countries contributed, how much was diesel, and whether a further release is required. Until that report, the operable facts are the ones Macron's office published: 100 million barrels, four months, diesel first, and no export bans inside the G7.