EU considers French diesel proposal after Trump threat

EU member states are reportedly assessing a French proposal to release up to 50 million barrels of diesel from strategic reserves in response to US pressure to help reduce fuel prices.

EU officials have been meeting this morning amid growing concern over the global price of diesel, and G7 leaders are expected to hold talks by video conference this afternoon.

The global scramble to reduce the price of diesel and other oil products, currently soaring due largely to the Iran War, has intensified.

There are ongoing tensions between the Trump administration and the European Union given the damage high diesel prices are likely to cause Donald Trump in the upcoming midterm elections.

President Trump has threatened a 90-day ban on US diesel exports as one way to lower costs at the pump, and warned that if France and Germany did not jointly release 120 million barrels from strategic reserves then the ban would go ahead.

The European Commission today condemned such a threat saying it was in no-one's interest and that it would undermine trust in the United States as a reliable partner.

This morning EU officials discussed the stand off through the Energy Union Task Force and it is understood that during that meeting France proposed a Europe wide release of 50 million barrels of diesel, and that the International Energy Agency should propose a worldwide release of a further 50 million barrels.

It is understood G7 leaders will take up the issue during a conference call this afternoon.

The European Commission has insisted there is no threat to strategic supplies of diesel in Europe and that any release of reserves would be a matter for the International Energy Agency, with the Commission co-ordinating Europe’s response in such a scenario.

Irish officials have said that the state has 95 days of diesel reserves and that there is no cause for concern.

However, the US threats to impose a ban on its diesel exports are certainly concentrating minds in Europe.

Dramatic consequences for EU economic performance

EU trade chief Maroš Šefčovič told reporters yesterday on the sidelines of the G20 trade ministers gathering in Milwaukee that any move by the US to ban diesel exports would be "unexpected for Europeans".

"It would have very dramatic consequences for our economic performance," he said of any potential diesel export ban.

Mr Šefčovič told reporters that he did not go into details with US Trade Representative Jamieson Greer on energy exports at the meeting, but the transatlantic partners "decided to stay in close touch to avoid any surprises here".

'Ongoing disruptions'

Reports said the Trump administration wants France and Germany in particular to tap their stockpiles of diesel to try to curb prices sent soaring by the US war on Iran.

"Our European partners should accelerate delivery on their existing commitments and make additional supplies immediately available to address ongoing disruptions," US Treasury Secretary Scott Bessent said in a post on social media.

High energy costs loom as a threat to Mr Trump's Republican party in next month's midterm elections.

"It is in Europe's 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," a US official told AFP.

At G20 trade talks in Milwaukee, Mr Greer struck a conciliatory tone, saying there was an "eagerness on both sides to work together" on the diesel issue.

And Mr Trump told reporters in Texas yesterday that he "may" ask European countries to release diesel reserves.

'Balanced solutions'

France's minister delegate for international trade, Nicolas Forissier, told AFP in Milwaukee: "I can't imagine that there will be a ban."

He stressed the importance of diesel to the United States and European countries, adding both sides will "try to find solutions."

"In France, we'll try to find balanced solutions all over the world," Mr Forissier added. "If not with the Americans, it will be with other countries."

On Wednesday, Mr Trump said he was still considering a possible ban on US diesel exports, while adding that he thought it could ultimately cause gasoline prices to rise.

"I'm thinking about it," Mr Trump told reporters in the Oval Office.

Speaking alongside Mr Trump, US Energy Secretary Chris Wright said that the world would "hear announcements from our friends in Europe" to push diesel prices down.

Asked about a release from strategic reserves, the French presidency said no such demand had been made when Emmanuel Macron and Mr Trump met on the sidelines of the UN General Assembly last week.

Mr Macron would also soon convene a video meeting of G7 leaders "to make progress on the various levers that can be used to address the rising fuel prices... including coordination on releasing reserves."

Mr Macron announced on 18 September a plan for such a meeting. The G7 gathering is expected in mid-October, according to the French president's press office.

Average US diesel prices have surged more than 70% to $6.39 a gallon since the start of the Iran war, according to AAA motor club data.

Fuel prices have caused living costs to soar, leaving Mr Trump's Republican Party fearing it could lose control of Congress in November's midterm elections.