EU Diesel Prices Surge to All-Time High; US Threatens Export Ban on France, Germany Unless They Release Diesel Stockpiles

EU Diesel Prices Surge to All-Time High

The average price of diesel at pumping stations across the European Union has gone up to a record €2.24 per liter, according to an AFP analysis of European Commission data. The latest rise represents a sharp increase from the €1.59  before the conflict in the Middle East started.

The increase in fule price is due largely to the  U.S. military campaign against Iran and the effective closure of the Strait of Hormuz, one of the world’s most important routes for oil and fuel shipments. Disruptions through the waterway have restricted the flow of crude from the Gulf, tightening global supplies and pushing energy prices higher. Disruptions in the Red Sea, Yemen's blockade of the Bab al-Mandab Strait, and refinery damage have added further pressure to an already worsening market.

The sharp increase in crude oil is hitting European refiners the hardest. Those expenses are ultimately being passed on to consumers, driving up prices at the pump and increasing operating costs for freight companies, farmers, and other diesel-dependent industries.

The EU-wide record has been accompanied by new all-time highs in 12 member states, including Belgium, Italy, Poland, and Romania. Prices have risen above €2.50 per liter in Denmark, the Netherlands, and Finland, while Germany has reached approximately €2.44 per liter. 

US Threatens Export Ban on France, Germany Unless They Release Diesel Stockpiles

As oil prices rise and Iran tightens its grip on oil shipments through the Strait of Hormuz, the Trump administration is seeking ways to curb the increase. In its latest effort, the administration has warned Germany and France to release emergency diesel reserve to help lower global fuel costs or risk facing a US ban on diesel exports.

The threat intensifies pressure on Europe as  Trump considers banning US diesel exports to bring down domestic fuel prices ahead of November’s midterm elections.

Reuters reported that the European Commission, Germany, France, Italy, Ireland, and the United Kingdom held a call on Thursday to discuss the potential release of diesel stocks.  Apparently the US had asked the EU to release 120 million barrels of diesel over the next six months. That amount would represent more than 40% of the 39 million metric tonnes of emergency gasoil and diesel held by EU member states.

Germany  and France together accounting for approximately 35% of the EU’s strategic reserves. Diesel prices have surged to record  high in several markets, including Europe, making the fuel a growing political and economic concern because it powers trucking, agriculture, and industry.

“It is in Europe’s best interest to work with the United States as we pursue multiple pathways to boost the supply of refined products and lower costs for consumers,” a U.S. official said.

Europe’s reliance on US fuel has increased since the EU banned Russian imports following  Russia and Ukraine war. That dependence has grown further  after  US Israeli  joint attack on  Iran in February 28th that has disrupted fuel supplies across the Middle East.