Focus – G7: Oil price relief may be temporary

BERLIN, 3 October /ATSH-DPA/ – The G7 countries’ decision to release oil and diesel reserves onto the market may bring only short-term relief for motorists, while the main supply problem remains unresolved, a German economist has said.

“This decision may soften the impact for a while, but the fundamental problem remains,” said Samina Sultan, of the German Economic Institute (IW).

According to her, the impact on consumers will also depend on how much diesel is included in the reserves released onto the market, since the G7 statement did not specify an exact figure for this.

Disruptions in the Strait of Hormuz have restricted crude oil exports and cut several important refineries off from the global market.

The G7 countries agreed yesterday to release 100 million barrels of crude oil and diesel from emergency reserves over a four-month period, amid rising fuel prices.

The measure is part of an initiative coordinated by the International Energy Agency (IEA).

The G7 also stated that it will consider the possibility of releasing further quantities of diesel.

Sultan stressed that a lasting normalisation of energy prices would require the reopening of the Strait of Hormuz to normal traffic.

Tankers have again come under attack in this area in recent days, according to the United Kingdom Maritime Trade Operations (UKMTO).

“If at the same time we see a further escalation in the Strait of Hormuz and nothing can get through, then the reserves will be just a drop in the ocean,” the economist said.

The U.S. government had earlier asked Europe to release more diesel onto the market and had also considered the possibility of limiting diesel exports.

However, the G7 statement expressly says that member countries will avoid imposing such restrictions.