The recent decision by the Group of Seven (G7) nations to release 100 million barrels of oil and fuel reserves is expected to reduce diesel prices at the pump in Britain by up to 6 pence per litre, according to economists. This move comes amid heightened pressure on fuel supplies driven by ongoing conflicts in the Middle East and Ukraine.
The coordinated fuel release followed threats by the United States to impose a ban on diesel exports in response to rising prices and supply concerns. However, US President Donald Trump later announced that the export ban would not be implemented, stating the decision was never finalized. He credited the G7’s planned stockpile release, describing it as “massive,” for alleviating the immediate crisis.
Analysts from Pantheon Macroeconomics projected that if wholesale price reductions are fully passed on to consumers, the cost for filling a 55-litre family car could drop by as much as £3.30, although overall prices would remain elevated at around £107 per tank. The UK’s diesel costs recently surpassed £2 per litre for the first time, according to RAC data, partly triggered by market anxieties linked to the Biden administration’s initial export ban threats.
Pantheon noted a 12 percent decline in European “crack spreads” — the margin between crude oil costs and refined products like diesel — between September 30 and the end of last week. Narrowing crack spreads typically signal a reduction in wholesale diesel prices, which can translate into lower pump prices. The analysts also suggested the release could trim the UK’s near-term inflation forecast by two to three basis points. Nevertheless, they expressed skepticism toward President Trump’s assurances, citing his history of abrupt policy reversals.
The causes of recent diesel price volatility remain contested. While many industry experts attribute high costs to potential disruptions in the Strait of Hormuz amid Middle East tensions, President Trump has shifted the focus toward the conflict in Ukraine. He cited damage to Russian refineries caused by Ukrainian forces as a significant factor, downplaying the impact of Middle Eastern unrest.
In addition to easing fuel supply constraints, President Trump signed an executive order permitting the use of tax-exempt red-dyed diesel for on-road driving. Traditionally reserved for off-road equipment such as agricultural machinery, this fuel is chemically similar to standard diesel but exempt from federal highway fuel taxes. The measure aims to provide consumers with relief amid surging prices just weeks before upcoming midterm elections. Addressing supporters in Nebraska, Trump acknowledged limited familiarity with the product but urged its use, emphasizing its potential benefits.
Industry leaders have voiced concerns about the long-term viability of global oil reserves given the recent geopolitical crises. BP Chief Executive Meg O’Neill warned that some countries remain “complacent” in responding to the ongoing energy challenges, underscoring the need for sustained and coordinated action to ensure supply stability.