French President Emmanuel Macron spoke with U.S. and Canadian leaders on October 2 local time and plans to convene a G7 leaders' meeting as soon as possible to help curb persistently rising fuel prices, with a focus on easing global refined fuel supply tightness.

According to a statement from the French presidential office, France, which holds this year's G7 rotating presidency, is actively working with the International Energy Agency (IEA) to coordinate measures aimed at easing price pressures and safeguarding crude oil and refined fuel supplies.

Macron stressed that it is in the "common interest" of G7 nations to "act together without imposing energy export restrictions." Overall coordination at the European level is also advancing.

European countries have been holding emergency consultations on how to respond to Washington's pressure to release strategic fuel reserves and to avoid a possible U.S. energy export ban.

Facing global market turmoil triggered by geopolitical war, Europe has been significantly slower than the U.S. in tapping emergency oil reserves, so the region still has a considerable scale of reserves available for release.

G7 Races to Open an "Energy Cooling Valve" as Oil Prices Retreat, but Refined Fuel Supply Pressure Remains

Macron's push for G7 coordination is centered on simultaneously easing fuel price increases and global refined fuel supply tightness, while avoiding export restrictions that could further fragment the market.

France is working with the IEA to coordinate crude oil and refined fuel supply measures; the latest progress shows European countries have discussed a French proposal: Europe would release 50 million barrels of diesel, and IEA members would release 50 million barrels of crude oil.

The plan is still under discussion, against the backdrop of U.S. demands for Europe to accelerate diesel stock releases and consideration of restricting its own diesel exports.

Expectations of reserve releases have already helped cool prices. Around 17:00 Beijing time on October 2, Brent crude futures were quoted at $99.48 per barrel, down sharply 2.77% intraday; WTI was at $89.52 per barrel, down 3.61%; the European diesel benchmark futures fell more than 5% to $1,377 per tonne.

Using the settlement price on February 27, the last trading day before the war broke out on February 28, as the baseline, the changes in near-month crude futures prices are as follows: both Brent and WTI benchmark prices remain sharply higher by about 38% and 35% respectively.

This comparison uses near-month futures price benchmarks at each point in time, which is sufficient to show that after the short-term oil price pullback, energy prices remain noticeably above pre-war levels.

Geopolitics still presents a situation of continued diplomatic engagement with the risk of military escalation unabated. Media reported on October 1 that Iran is still pushing negotiations through Qatar while preparing a broader response to a possible resumption of large-scale U.S. strikes; The Wall Street Journal latest disclosed that the U.S. is deploying a third carrier strike group and about 9,000 to 10,000 personnel to the Middle East.

Therefore, the current oil price pullback reflects expectations of supply repair and policy intervention and cannot yet be equated with the disappearance of the war risk premium.

From the Strait to the Bond Market: The "Fuel Supply Line" Is Also a Buffer Line for Global Risk Assets

The Saudi East-West Pipeline is recovering, but there is still a clear gap between nominal capacity and actual flows. The pipeline restarted on September 22, and Yanbu port subsequently resumed loading; as of media reports on September 29, actual pipeline flows were about 2 million to 2.65 million barrels per day, below the nominal capacity of 7 million barrels per day.

Kpler expected at the time that flows could later rise to 3 million to 4 million barrels per day, and returning to about 5.5 million barrels per day before the attack could still take a month.

The 7 million barrels here refers to transport capacity and cannot be written as current supply growth.

The Strait of Hormuz is resuming transit, while risks in the Bab el-Mandeb Strait continue to constrain alternative routes. Kpler estimated at the end of September that crude exports through Hormuz that month were about 9.719 million barrels per day, indicating the strait was not completely closed; but shipping intelligence agencies reported that on September 29, three tankers were still hit by unidentified projectiles while transiting.

In the Red Sea direction, the Houthis advanced in September to Perim Island in the Bab el-Mandeb Strait, and on October 2 Yemeni government forces announced 20 airstrikes on Houthi targets in Taiz.

From a route perspective, crude shipped south from Yanbu to Asia still faces risks in the Bab el-Mandeb Strait; shipments north through Suez to Europe do not need to pass through Bab el-Mandeb, and the two export paths cannot be conflated.

A more critical bottleneck is emerging in refining and refined fuel trade. The IEA's September report showed that global refinery throughput in August fell by 4.2 million barrels per day year-on-year, and Gulf countries' net diesel exports were only about 390,000 barrels per day, slightly above one quarter of pre-war levels.

This explains why diesel can still be scarce even after crude exports improve: crude must arrive at port, then be processed by available refineries, and then delivered through an unimpeded trade network.

Releasing diesel stocks can directly supplement end-user fuel; the effect of releasing crude stocks depends on whether refining and transport links can absorb it.

If major exporters simultaneously restrict refined fuel exports, domestic supply measures may further raise fuel costs in importing regions, which is precisely the market significance of Macron's emphasis on joint action and avoiding export restrictions.

This energy chain is already linked to global bond markets. The U.S. 10-year Treasury yield briefly surged to 5.34% on October 1, the highest since 2002, and returned to about 5.24% on the morning of October 2; the U.K. 30-year yield had previously broken above 6% for the first time since 1998 and then also declined as oil prices fell.

The latest long-bond moves should be summarized as a "partial repair after multi-year highs," rather than still rising one-way.

**Easing energy pressure helps improve inflation and policy rate expectations, but fiscal supply, real capital demand and term premiums will still affect long-end pricing.

This is why, in the view of some analysts, the "navigation recovery line" is not yet equal to the "fuel relief line," and the refined fuel supply line is also an important valuation-system buffer line for global risk assets such as equities, cryptocurrencies and high-yield corporate bonds.

Diesel costs transmit to prices through transport, agriculture and industrial production; if energy price pressures persist, they may continue to limit room for monetary policy easing and thereby push up long-term government bond yields, continuously increasing discount pressure on risk assets.