Oil prices fell sharply on Friday after the G7 group of leading industrialised nations agreed to release up to 100 million barrels of oil and diesel from strategic stockpiles. Analysts warn, however, that the relief is likely to be short-lived.
French President Emmanuel Macron, whose country currently chairs the G7, announced the plan, which will be coordinated by the International Energy Agency (IEA). It follows pressure from Washington for countries to release reserves as diesel prices climbed and supplies tightened.
Earlier in the day, as it became clear that G7 countries were moving towards a coordinated release, Brent crude fell by roughly 3% to $99.25 a barrel. US benchmark West Texas Intermediate (WTI) dropped by more than 4% to $88.92. Over the week, Brent is down about 4.7% and WTI about 3.7%.
The reaction was even sharper in refined products. European gasoil, the main futures benchmark for diesel, fell by about 4.3% to $1,386.75 a tonne.
The fall shows how sensitive the market is to even the prospect of extra supply. In the short term, the G7 announcement changes the picture by adding physical fuel at a time when commercial and government storage is being run down.
Analysts say, though, that the underlying problem has not been solved. Global stocks have already fallen significantly, flows from the Persian Gulf remain restricted, refineries face serious obstacles and the market still depends heavily on developments in the Strait of Hormuz.
The current crisis also differs from earlier oil price spikes. The shortage is no longer confined to crude and increasingly affects refined products, chiefly diesel, jet fuel and petrol.
The IEA had already pointed out that refineries around the world are processing significantly less crude than a year ago, while problems in the Middle East and attacks on Russian facilities have squeezed supply further. In July, global refinery throughput was almost five million barrels a day lower than a year earlier.
Diesel exports from Russia, the Middle East and Asia were also about 1.3 million barrels a day lower year on year, equivalent to roughly 20% of global seaborne diesel trade. China added to the strain this week by suspending most of its fuel exports for October, excluding those to Hong Kong and Macao, which further limits supply in Asia.
Why 100 million barrels is not seen as a lasting fix
Under the G7 plan, a substantial share of the diesel will be released within the first 20 days, with the full 100 million barrels made available over four months. Spread evenly, that would amount to roughly 830,000 barrels a day. The move follows a record 400 million barrel emergency release coordinated by the IEA in March.
The release may lower prices, temporarily cover part of the shortfall and shift traders’ expectations. But as Reuters points out, it does not by itself change the fundamental balance of supply and demand.
In August, the IEA estimated that observed global stocks had already fallen by about 410 million barrels since the start of the war, drawn down at an average rate of 2.7 million barrels a day. Strategic reserves are therefore acting as a “bridge”. Until normal production and commercial flows are fully restored, each new release erodes the “safety cushion” available for the next disruption.
Barclays forecasts $115 a barrel
That is the contradiction in today’s market. Prices fell after the G7 announcement, yet Barclays raised its forecast for Brent in the fourth quarter of 2026 to $115 a barrel. The bank cites continued falls in inventories and tightness in the physical oil market.
Analysts are in effect distinguishing between two time horizons. In the short term, the release of stocks may weigh on prices and keep them near, or even below, $100. Over a period of months, however, the market could become extremely tight again if Middle East flows do not resume.
A Reuters poll of analysts published on 30 September points the same way. The average forecast for Brent in 2026 rose to $89.05 a barrel, and for WTI to $83.90, as analysts believe disruption to Gulf exports is unlikely to disappear quickly.
Everything still hinges on the Strait of Hormuz
The central question remains what happens in the Strait of Hormuz. Before the war, about 20 million barrels of crude and refined products passed through it every day.
The US think tank Brookings Institution has noted that the longer the disruption lasts, the more the temporary measures holding prices down are used up. These include strategic reserves, oil already at sea and alternative pipelines.
Its analysis estimated that, if flows were severely restricted for a prolonged period and those cushions ran out, Brent could climb far higher, towards $120 to $150. That is an extreme-scenario model rather than a forecast of today’s price, but it shows the scale of the geopolitical risk the market is still pricing in.
The significance of the G7 move may lie less in crude than in diesel. According to the Financial Times, diesel prices have risen far faster than crude as available cargoes have dwindled and refining margins have hit exceptionally high levels. In the US, the surge even prompted talk of restricting exports. Goldman Sachs says that could initially cut US diesel prices by about 4%, but would push up wholesale prices in Europe.
The G7 package includes a pledge not to restrict trade in energy and oil products between partner countries, as well as measures to increase refinery output. The coordinated release is intended to head off exactly this kind of protectionist domino effect and the shortages that would follow.
The market signalled on Friday that it believes the plan can bring temporary relief. Whether the fall lasts will depend less on the G7’s 100 million barrels than on whether normal oil flows from the Middle East are restored and refinery output recovers.
In other words, the G7 may be buying time. The question is what state the market will be in when that time runs out.
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