Oil prices declined sharply on Friday, with European gasoil futures also falling, as reports surfaced that European governments are considering releasing fuel and crude stockpiles to alleviate tight global energy supplies. The potential increase in available reserves helped ease market concerns about supply constraints.
At 10:35 GMT, Brent crude dropped $2.57, or 2.5%, to $99.74 a barrel, while U.S. West Texas Intermediate (WTI) slid $3.53, or 3.8%, to $89.34 a barrel. Both benchmarks were on course for their third consecutive weekly decline, with Brent down approximately 4.1% and WTI around 3.2% for the week. Meanwhile, European gasoil futures, which serve as a key indicator for diesel prices, fell nearly 5% to $1,380.50 per metric tonne.
Ole Ihansen, head of commodity strategy at Saxo Bank, attributed the downturn in energy markets primarily to discussions within the European Union and International Energy Agency (IEA) regarding strategic stockpile releases. “The whole energy complex trades lower, led by gasoil, as U.S. and European countries discuss releasing fuel and crude stockpiles to ease acute market tightness,” he said.
According to a source familiar with the talks, EU governments convened on Friday to consider a French proposal for European nations to collectively release 50 million barrels of diesel. In addition, IEA member countries are expected to contribute approximately 50 million barrels of crude oil from their reserves in a coordinated move to supply the market.
The focus on stockpile releases underscores a shift in the energy market’s primary pressures from crude oil availability toward refined products. Ihansen noted that refinery capacity and output have been reduced across key regions such as the Middle East and Russia, exacerbating tightness in refined fuel supplies despite adequate crude oil volumes.
This move by European governments and the IEA aims to mitigate immediate supply concerns and stabilize prices as the market responds to ongoing disruptions and constraints in refining capacity.