European plan to release diesel reserves lacks operational details: analyst warns the market remains unstable

Europe’s plan to release diesel reserves to curb rising fuel prices has “very unclear” details from an operational perspective, Naeem Aslam, chief investment strategist at Zaye Capital Markets in London, said on Friday, according to Al Jazeera reporting.

“The announcement seems aimed at easing the pressure, but the real structural changes — who will release the reserves and where the bans will be lifted — remain unclear,” Aslam said. According to him, the decision is only an attempt to “slow the bleeding” and will have a negative impact on the market.

Aslam compared the situation to a bank panic: “Imagine a situation where there is a rush on the market and suddenly the central banks come and say you can withdraw only a certain amount of money from the bank — that actually slows the bleeding, but creates even more instability in that aspect of investor confidence in those institutions,” he said.

“The same rule applies here. This is a big announcement to slow the bleeding, but the real structural issues regarding the Strait of Hormuz are still there, making consumer confidence in the market shaky.”

The announcement comes at a time when the U.S.–Iran war has practically blocked commercial shipping through Hormuz and pushed oil prices above $105 a barrel, while European countries are facing growing pressure over diesel supplies ahead of winter.