U.S. pressures European allies to release diesel reserves

The Trump administration has asked several European allies to release diesel fuel from their national emergency stockpiles in an effort to increase global supplies and tamp down on soaring prices.

The average U.S. price of diesel has soared by 70% since the war with Iran began, hitting $6.38 per gallon on Thursday, according to AAA.

Less than five weeks before the U.S. midterm elections, Republicans are eager for any way to lower domestic fuel prices.

U.S. Energy Sec. Chris Wright appeared confident this week that Europe would agree to tap its diesel reserves.

“You will hear announcements from our friends in Europe about new diesel supplies that’ll come to the market that’ll meaningfully push diesel prices down,” he told reporters Wednesday at an event with President Donald Trump in the Oval Office.

But U.S. Trade Representative Jamieson Greer stopped well short of suggesting the European release was a done deal.

“I spoke with my French counterpart” about a diesel release, he said Thursday, calling it a “very good conversation.”

“I let him know that this is an idea that that we’ve had in the U.S.,” he told Bloomberg Television. “We’d love to have a collaborative response to this.”

The United States is hosting G20 trade ministers in Milwaukee, Wisconsin this week, where Greer said he planned to meet his European Union counterpart. Also in Milwaukee are trade ministers from China, India, the United Kingdom and other countries impacted by tight global diesel supplies.

The message coming from Europe Thursday was also a cautious one.

The E.U. is “in very close contact with our member states on this ongoing issue,” European Commission energy spokesperson Anna-Kaisa Itkonen told reporters at a press briefing in Brussels.

“We are also having high-level contacts ongoing with the U.S. administration,” she said.

The majority of Europe’s emergency diesel reserves are stored in Germany and France. Both American and European oil refineries have been running at near full capacity for months, churning out as much diesel fuel as possible.

While the Iran war is responsible for the lion’s share of price increases in crude oil and unleaded gasoline around the world, the price of diesel has been outpacing both of them since July, albeit for a different reason.

Russia has traditionally been a major exporter of diesel, but that stopped this summer after Ukrainian drone strikes destroyed Russian refineries.

On July 8, Russia banned the export of diesel in order to preserve its domestic supply. On Wednesday, the Kremlin extended that ban until the end of October.

“We’re tight on diesel because we’ve lost diesel exports from Russia,” Wright said at the White House. “We’ve lost diesel, some diesel exports from the Middle East, although we’re restoring those. And we’ve lost diesel exports from China.”

“That’s a lot of interruptions,” he said.

But whether or not Europe will tap its emergency reserves of diesel to increase global supply is complicated by the fact that the Trump administration is actively considering a move that is effectively the opposite of what it is asking Europe to do.

On Wednesday, the president mused about imposing a ban on exports of U.S. diesel.

“I’m thinking about it,” Trump told reporters in the Oval Office. “I speak to Chris and Doug about it a lot,” he said, referring to Wright and Interior Secretary Doug Burgum.

“They sort of think … it’ll help diesel, but it might raise the price of other things,” he said.

An export ban on U.S. diesel would hit European countries particularly hard.

It would also land at a moment when average U.S. prices for unleaded gas remain almost 50% higher than they were on Feb. 28, the day the U.S. and Israel attacked Iran.