British motorists and households are facing a fresh squeeze on their budgets after G7 leaders agreed to release 100 million barrels of diesel within four months, a move designed to head off Donald Trump’s threatened ban on American diesel exports to Europe.
The decision, announced by French President Emmanuel Macron after crisis talks on Friday, came as diesel prices in the UK hit a record high of 200.01p a litre for the first time, up from 199.79p on Thursday. Filling up the average family car now costs £110, according to RAC, close to £32 more than at the start of the United States’ war with Iran in February.
For ordinary people, the stakes extend well beyond the forecourt. Dr Jonathan Owens, an operations and supply chain expert at the University of Salford, warned that the impact “will not stop at the petrol station”, because almost everything consumers buy has travelled through a supply chain, often involving several diesel-powered journeys. Food, construction materials, manufactured goods and online deliveries are all exposed to higher transport costs, he said, creating another source of inflationary pressure “at precisely the point households and businesses can least afford it”. UK experts have warned the situation could push Britons’ food bills even higher.
The backdrop is a standoff between the US and the EU following Mr Trump’s conflict with Iran, which has sent fuel prices soaring. Moments before the G7 deal was announced, the US president said Europe was going to “release a massive amount” of its stocks, after he threatened to cut off American diesel supplies if European nations did not release reserves to help bring down global fuel prices. He has been considering the potential ban to bring down US fuel prices ahead of November’s midterm elections, though it was not known whether the UK would be included.
Mr Macron said on Friday that G7 allies would release strategic reserves “up to 100 million barrels, within four months” and “take no measures to restrict the exchange of energy and petroleum products between partner countries”. The decision followed his separate overnight phone calls with Mr Trump and Canadian prime minister Mark Carney. According to Reuters sources, the US had earlier called for European countries to release 50 million barrels of diesel and for International Energy Agency members to release 50 million barrels of crude oil. The US president was said to be frustrated with European allies for not fully following through on earlier commitments to release emergency stocks.
Meanwhile, White House officials cast the outcome as a victory, with deputy press secretary Taylor Rogers writing on X that “President Trump always negotiates deals that serve the best interests of the American people”, adding: “This will put more supply on the market and bring diesel prices down. He is undeniably the Dealmaker-in-Chief!”
UK ministers, for their part, have moved to reassure the public while pressing for stability. Earlier on Friday, transport minister Keir Mather said the UK was “working very closely” with the US to stress the importance of “sustaining flows of diesel around the world”, but insisted the country has a “range of supply” available. “I want to reassure people this morning that the United Kingdom has got a diverse range of supply when it comes to diesel,” he said, noting that the UK also works through the International Energy Agency and with European partners, from whom a proportion of diesel imports come.
Chancellor John Healey said he was taking the export threat “very seriously”, telling the BBC: “We’re also making the provision that we may need to and we have our own stocks in the UK.” He added that the UK works closely with the Americans, and that the best outcome would be a diplomatic settlement and an end to the fighting with Iran. British officials are in talks with the US over any possible ban, and Andy Burnham has said he would seek an exemption for the UK if it came to that.
The consequences of a ban could be severe. Angel Talavera, chief European economist for Oxford Economics, said a full ban could lift European diesel prices by 40 per cent to 50 per cent, with “devastating consequences” for consumers who have already seen pump prices rise by 40 per cent since the start of the US war with Iran.
Prices had risen steadily in recent weeks, with a new record set on Monday that surpassed the previous peak from June 2022, in the wake of Russia’s invasion of Ukraine. Companies have been flagging that higher prices are pushing up transportation costs and putting pressure on supply chains.
Dr Owens cautioned that while releasing emergency stocks can provide an important short-term buffer, it is not a lasting fix. “Additional diesel entering the market could help maintain availability, reduce immediate supply pressures and potentially limit extreme price movements,” he said, adding that it buys businesses time to adapt their logistics, sourcing and inventory strategies. But, he warned, “Using them now reduces protection against future disruption until those stocks are replenished… Emergency stocks can provide valuable breathing space, but they are a short-term intervention rather than a long-term solution.”
Whether the G7 release proves enough to shield households from the next price shock may depend on how quickly those drained reserves can be rebuilt.