Macron Seeks Further Emergency Oil Release Amid European Supply Concerns

French President Emmanuel Macron is convening G7 countries to address current energy supply issues, including a potential further release of emergency oil stocks. The announcement was made on Friday, following reports of Europe experiencing a reduction in Saudi crude deliveries and diesel prices reaching record levels, according to OilPrice.com.

Mr. Macron stated that the G7 meeting, scheduled for the coming weeks, aims to coordinate strategic stock levels, exports, and production capacity among member nations. France is also working to secure supplies of diesel, jet fuel, and natural gas for the upcoming months.

Diesel Market Pressures

Europe's diesel benchmark has reportedly exceeded $200 per barrel this week, with retail-equivalent costs, including taxes, pushing above $300. This increase follows extended restrictions on Russian diesel exports and ongoing constraints on Middle Eastern product exports. OilPrice.com highlights that European emergency stocks contain substantial volumes of finished fuels, including diesel, unlike the United States Strategic Petroleum Reserve, which holds crude.

Adding to supply concerns, Saudi Aramco informed at least two European refiners on Friday that they would not receive crude under term contracts for October. This follows an attack on the company's East-West pipeline. While Aramco is working to restore partial pipeline capacity within days, full recovery is anticipated to take approximately six weeks. The company has rerouted an estimated 60 million barrels via the Persian Gulf and ship-to-ship transfers near Oman, with most of these barrels reportedly destined for Asian refiners. Europe is consequently sourcing replacement crude from the North Sea and other regions.

Strategic Reserve Utilisation

International Energy Agency (IEA) members have already released over 300 million barrels of emergency stocks since March. However, global observed inventories remain 507 million barrels lower than at the start of the conflict, having drawn down at an average of 2.8 million barrels per day over the past six months, as reported by OilPrice.com. A further stock release could quickly inject physical barrels, particularly finished fuels, into the European market.