EU mulling fresh diesel reserve release amid U.S. pressure - Reuters

Investing.com - The European Union was discussing a French proposal to tap emergency diesel reserves, as the bloc responds to U.S. pressure to roll measures to stem a jump in the fuel's price, Reuters reported on Friday.

Under the plan, EU governments would release 50 million barrels of diesel and International Energy Agency members would release 50 million barrels of crude oil, the news agency said, citing two sources familiar with the matter.

Diesel costs, which factor heavily into powering machinery and transportation systems, have climbed as a result of Gulf supply shortages caused by the war in the Middle East. Ukrainian attacks have also damaged Russian refineries, leading Moscow to impose an export ban. Chinese refiners have also ceased October fuel exports to build up their own domestic stocks, Reuters reported.

The rise in diesel prices has weighed particularly hard on the U.S., where President Donald Trump is facing a backlash against elevated energy costs ahead of crunch midterm elections in November.

Washington has urged the France and Germany -- two major EU members -- to release diesel stocks to help cap prices, or face a potential U.S. diesel export ban, Reuters reported. It has also demanded that EU countries, including France and Germany, release 100 million barrels of diesel within 20 days, the news agency added.

The EU is reportedly weighing the impact of tapping emergency diesel reserves, especially during a time when uncertainty surrounds the outlook for Gulf energy flows.

Historically, the EU has relied on supplies from the Middle East and Russia, but has to increasingly turn to alternative import sources, such as the U.S., in recent years.

Quoting a European Commission spokesperson, Al Jazeera reported that the EU "fully rejects" the U.S. threat to ban diesel exports, saying it would "not be beneficial to anyone" and "undermine our trust in the United States as a reliable partner."

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