US Government Informs Germany and France: Release Emergency Diesel Reserves to Lower Global Oil Prices
US Demands France and Germany Release Diesel Reserves or Face Embargo
The US government has informed Germany and France to release emergency diesel reserves to lower global oil prices, or they may face a US diesel export ban, according to Reuters citing three sources close to the discussions.
The US is dissatisfied with France and Germany, believing that the two countries have not fulfilled their commitments made earlier this year during the International Energy Agency's coordinated release of oil reserves, which was intended to offset supply disruptions related to the war with Iran. Officials have raised concerns with the International Energy Agency. The EU did not immediately respond to claims of "members not fulfilling commitments."
The inventory structure is concentrated in the two countries. The latest available data from the EU for May 2025 shows emergency diesel and gasoline stocks of about 39 million tons, with Germany holding 5.6 million tons and France 8.2 million tons, together accounting for about 35% of the EU's strategic reserves. EU rules require member states to maintain emergency oil stocks equivalent to at least 90 days of net imports or 61 days of domestic consumption, whichever is higher.
In March, the International Energy Agency agreed to a global release of about 400 million barrels, with the US contributing 172 million barrels and EU countries committing to supply 20% of the total. EU Energy Commissioner Dan Jorgensen stated that he has discussed additional releases with IEA Director-General Fatih Birol, but it has not yet been decided whether to ask member states to release more. Energy Minister Chris Wright publicly stated that the US and Japan are fulfilling their commitments, while several European member states have only released a small portion of their promised crude and refined oil.
Diesel prices have risen to record or near-record levels in several markets, including Europe. The average price from the American Automobile Association reached $6.5107 per gallon. US diesel exports hit a record in August, reaching 1.6 million barrels per day, compared to about 1 million barrels per day before the war with Iran in February; buyers include Brazil, Chile, Mexico, Peru, Morocco, France, and the UK. Kpler reported that last month, the US supplied 420,000 barrels per day to the EU and the UK, accounting for more than half of the imports for that month.
From a market mechanism perspective, this is a policy pressure driven by oil prices ahead of elections, rather than spot trading. The buyer is the US government, aiming to reduce fuel costs for farms, trucks, and manufacturing, while the sellers are France and Germany, being asked to tap into their emergency reserves. If the embargo is implemented, US refined oil exports would be curtailed, widening the net import gap for Europe, while diesel from the Middle East through the Strait of Hormuz and the Red Sea has already been disrupted by the war. Beneficiaries would be domestic diesel buyers in the US, while European importers reliant on US diesel would be under pressure, along with US refineries that may be forced to cut production.
Source: Public Information
ABAB AI Insight
The Trump administration's approach did not start with an embargo. In March, the International Energy Agency coordinated the release of about 400 million barrels, with the US committing to 172 million barrels and the EU agreeing to 20% of the total; Wright publicly pointed out that several European countries only released a small portion, while Japan was categorized as having fulfilled its commitment. In September, the White House first urged the EU to collectively reduce emergency diesel stocks, and the Energy Minister himself stated that a blanket embargo "definitely won't work." The statement on October 1 narrowed the focus to France and Germany.
The pressure is applied through the export switches of US refineries, not from the balance of US strategic reserves. In August, US diesel exports reached 1.6 million barrels per day, with the US accounting for more than half of European imports. The motivation is the cost of living ahead of the midterm elections: farms, trucks, and manufacturing all use diesel, with the average price reaching $6.5107 per gallon. The strategy is to exchange "if you don't release reserves, we will cut off your access to US goods" for Europe to tap into reserves, avoiding a domestic embargo that would force refinery surpluses into production cuts.
The industry position is during a supply control period. Compared to the coordinated releases at the time of the establishment of the International Energy Agency in the 1970s, and the shift in Europe to buy US and Middle Eastern diesel after 2022 due to cutting off Russian supplies, this time it is a bilateral threat within the coordination mechanism to fill the gap. France's 8.2 million tons and Germany's 5.6 million tons together account for about 35% of the EU's emergency diesel stocks, so the pressure falls on the large stockholders, rather than on countries like the Czech Republic that receive very little direct supply from the US.
Structurally, this represents a transfer of pricing power. Emergency stocks are originally locked in according to 90 days of net imports or 61 days of consumption, not participating in daily pricing; being asked to release them means pushing strategic barrels into the spot market. The mechanism is: after the war disrupted diesel flows through the Strait of Hormuz and the Red Sea, whoever still holds unused strategic stocks is treated as marginal supply; the export ban temporarily reverts the sales rights of US refineries to domestic prices.
ABAB News · Cognitive Law
If strategic stocks are not released, they will be treated as spot supply
Export bans are a price tool, not a supply tool
In coordinated releases, those who release less are named first