More reserve oil could ease Europe’s fuel costs but leave less protection against another shock

Oil stocks can buy time, not replace disrupted supply

The pressure is real. In a Sept. 18 market analysis, the IEA said oil shipments through the Strait of Hormuz averaged 7.6 million barrels a day in August, 13.1 million barrels a day below prewar levels. It said observed oil inventories worldwide had fallen by 507 million barrels since the war began.

Producers outside the Gulf have increased supply, and lower demand has helped absorb some of the losses, the agency said. Earlier releases of emergency stocks also eased some pressure. But the IEA warned that if Gulf exports remain constrained while commercial inventories keep shrinking, higher prices and further reductions in demand may be needed to balance the market.

Another reserve release could put more oil into that strained market and potentially limit price increases. That is a meaningful benefit for people buying diesel and for businesses that depend on it. It is not the same as restoring the missing shipments through Hormuz, creating lasting new supply or guaranteeing a lower price at a European pump.

Timing matters, too. If roughly one-third of the oil Birol described has still not reached markets, announcing another release would not instantly put fuel where European buyers need it. Nor can an unspecified oil release be treated as a promise of diesel: IEA members can hold both crude oil and refined products, but no type or amount for a further release has been established.

High diesel prices are not proof of an immediate shortage

Europe is particularly exposed to diesel disruptions. Euronews reported that the United States supplied around half of EU diesel imports in August. It also reported that the EU average diesel price reached a record €2.23 per litre in the week before Tuesday’s meeting. Those figures explain why the prospect of further disruption carries weight even without empty fuel stations.

The European Commission’s Oil Coordination Group drew that distinction on Sept. 8. It said EU demand for diesel and jet fuel was being met through increased European refinery output and alternative supplies from abroad. Commercial and emergency stocks were sufficient, and the group saw no immediate oil-supply problem.

Its assessment was not a promise that conditions would stay comfortable. The group warned that developments in the Middle East, together with typical autumn and winter demand, could tighten markets in the weeks and months ahead. Policymakers can therefore take the price pressure seriously without declaring a supply emergency the Commission had not found.

The strain goes beyond the pump, but it should not all be assigned to diesel. EU Energy Commissioner Dan Jørgensen said member countries had spent more than €100 billion extra on energy imports since the Iran war began, Euronews reported. That figure covers energy imports, not a diesel-only bill, and does not show how much any household has paid. It does show the scale of Europe’s exposure to costly imported fuel.

The case for using reserves has a cost

There is a strong argument for acting before a shortage becomes acute. Emergency stocks exist to help countries respond to severe supply disruptions; keeping them untouched while fuel costs rise would deny people a tool governments built for precisely this kind of risk. If conditions deteriorate, a coordinated release could help buyers bridge a gap while other supplies arrive.

The counterweight is what remains after a release. IEA stockholding rules require members to keep oil equivalent to at least 90 days of net imports and to be ready for a collective response to severe disruptions. Drawing down that buffer to ease near-term pressure means having less immediately available if exports fall further or another disruption follows. Neither the rules nor the market figures identify a volume that should be released now.

The size of the system is not the same as the amount currently ready for another action. On March 10, the IEA said members held more than 1.2 billion barrels in public emergency stocks and another 600 million barrels of industry stocks under government obligation. Those were March figures, before the subsequent release; they should not be read as a current inventory.

The hardest judgment is not whether expensive diesel matters. It is whether releasing more stocks soon would ease prices enough, and quickly enough, to justify reducing protection against a potentially worse disruption. The sources do not establish how much of any market benefit would reach consumers at the pump. Governments and the IEA’s member countries would bear responsibility for that trade-off, while households would live with its consequences.

The US diesel debate adds another uncertainty

Europe’s reliance on US diesel makes American export policy part of the winter calculation. Politico reported Tuesday that the White House was looking to Europe to release diesel from strategic reserves. That account does not establish a formal request, a European agreement or the terms of any release.

The consequences of a US export restriction also depend on what, if anything, Washington decides. Oxford Economics estimated that a full US diesel-export ban could raise European wholesale diesel prices by 40% to 50%, with a possible €0.50 to €0.60 per litre increase for consumers including value-added tax, Euronews reported. Those are estimates for a full ban, not a forecast for narrower restrictions whose scope, duration and exemptions were unclear.

The strongest objection to a ban comes from US industry groups that say it could hurt supply rather than protect it. In a letter sent Wednesday to President Donald Trump, the Business Roundtable, the American Petroleum Institute and other groups argued that refiners might cut production, reducing output of gasoline and jet fuel as well as diesel, according to Euronews. That is their warning, not an established outcome. Ireland’s energy minister, Darragh O’Brien, said a ban was unlikely because of the damage it could do on both sides of the Atlantic, while urging Europe to prepare.

Jørgensen’s call for faster investment in electricity and power infrastructure points to a different time horizon: reducing Europe’s reliance on imported fossil fuels. Such investment cannot deliver emergency oil for this winter. Equally, spending down reserves cannot remove the import dependence behind repeated price shocks.

For now, more stocks from the March action have yet to reach markets, the Commission’s last reported assessment found EU supplies adequate, and a further IEA release would require member agreement. Whether those facts remain reassuring depends on what happens to shipments, inventories and diesel prices as winter demand rises.