The U.S. is reportedly threatening to ban exports of diesel fuel to parts of Europe, unless countries like Germany and France release more of their diesel reserves in an effort to tamp down spiking prices ahead of the midterm elections, according to reports from Reuters and Politico.
This also comes after U.S. President Donald Trump said last week that his administration was considering a temporary export ban on all U.S. diesel fuel. The idea faced large pushback from industry representatives and energy economists as posing long-term financial risks to the economy, even if they were to provide some short-term price relief.
The European Commission, Germany, France, Italy, Ireland and Britain were holding a call on Thursday to discuss the possible need to release diesel stocks, an EU official told Reuters.
The U.S. administration has been particularly frustrated with France and Germany, which U.S. officials believe have not fully followed through on earlier commitments to release emergency oil and petroleum stocks, Reuters has reported previously.
โIt is in Europeโs best interest to work with the United States as we pursue multiple pathways to boost the supply of refined products and lower costs for consumers,โ one of the sources, a U.S. official, told Reuters.
A second source, based in a European capital, said that the U.S. has asked the EU to release 120 million barrels of diesel in the next six months.
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U.S. Energy Secretary Chris Wright told reporters on Wednesday that the U.S. administration expected announcements soon from Europe about new diesel supplies.
โWeโve โlost some diesel โexports from the โ Middle East, although weโre restoring those, and weโve lost diesel exports from China,โ he said. โSo thatโs a lot โof interruptions.โ
Germanyโs economy ministry did not respond immediately to a Reuters request for comment. Franceโs energy ministry declined to comment.
Diesel prices have been skyrocketing worldwide along with many other oil, gas and energy commodities amid ongoing geopolitical conflicts.
Diesel fuel is vital for communities and economies alike, as itโs commonly used across industrial, agricultural and logistics sectors to fuel trucks and tractors, ships and trains, as well as for power generation in remote areas.
The U.S. is also the worldโs largest producer and supplier of diesel fuel, followed by Russia and Saudi Arabia, according to the International Energy Agency.
Exports of oil and other products have been strained as the war in the Middle East, sparked in February by a joint attack between the U.S. and Israel on Iran, has led to a near complete blockage of the Strait of Hormuz shipping channel.
The war in Ukraine has also limited diesel fuel exports from Russia and other nations, and is adding to supply constraints worldwide.
Although releasing more barrels of oil from strategic reserves into the global supply could help bring down prices for gas, diesel and other by-products, that relief may only be a short-term fix. Thatโs because those stockpiles eventually need to be replenished, which means increasing demand for oil over the long term.
When global oil supplies are limited and demand remains high, prices typically rise, and diesel prices have been hovering around record levels for several weeks. When changes are expected for supply and demand, like future policy changes, prices can also fluctuate quickly in response.
Both regular gas and diesel prices have been skyrocketing worldwide since the war with Iran began earlier this year, and Canadian consumers and businesses have been feeling it in their wallets and budgets.
The national average price for diesel fuel in the U.S. was US$6.39 per gallon, according to the American Automobile Association, up from $3.71 a year ago and after hitting an all-time high of $6.53 last week.
In Canada, the national average for diesel fuel is hovering around C$2.60 per litre, according to Natural Resources Canada, up from $2.35 last month, and about $1.54 a year ago.
The Canadian national average price for regular gas is about $1.75 per litre, according to the Canadian Automobile Association, up from $1.71 last month and $1.35 a year ago.
โ with a file from Reuters
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