The U.S. has reportedly told the European Union to release 120 million barrels of diesel from its stockpiles in the next six months.
With the U.S. reportedly telling Europe to release diesel, here's how European stockpiles would interact with a potential American ban.
Reuters is reporting that the U.S. has told Germany and France to release diesel from their stockpiles or face a possible diesel export ban. Another source who spoke to the news outlet said the Trump administration asked the European Union to draw down 120 million barrels of diesel over the next six months.
Reuters also reported that the EU Commission, France, Ireland, Britain and Italy are holding a discussion over the phone about the possibility of releasing diesel stocks, according to an EU official.
It comes as the White House administration ramps up its efforts to reduce diesel prices ahead of the midterm elections on Nov. 3.
In September, President Donald Trump said he would back a ban on exports of U.S. diesel to help lower costs after diesel reached an all-time high of $6.53 a gallon last month. Prices were hovering around the $6.39 a gallon level early Thursday, according to AAA.
Strategists have largely been in agreement that although restrictions on the international shipping of U.S. diesel would likely temporarily help to ease prices, once storage becomes full, prices could spike again.
A team at Goldman Sachs, led by Daan Struyven, head of oil research, recently said that if stocks reach full capacity within nine and 10 weeks, or sooner, U.S. retail gasoline prices would increase by $0.3 a gallon each week. The strategists also said that each week of the restrictions could add about 2% to diesel prices in Europe.
However, they noted that the release of European strategic stockpiles of diesel could offset around half of that price rise.
According to Goldman, European countries in the Organization for Economic Co-operation and Development still had 190 million barrels of diesel in reserves at the end of June - which is equivalent to almost 500 days of U.S. diesel imports and considerably higher than the reserves from other OECD members.
-Nora Redmond