Diesel prices in Denmark have climbed to record levels. Now the G7 countries are releasing up to 100 million barrels of diesel and crude oil from emergency reserves in an attempt to ease pressure on global energy markets.
Danish motorists could see some relief from record-high diesel prices after the G7 countries agreed to release emergency fuel reserves.
The move was announced Friday following a meeting of G7 leaders and will see up to 100 million barrels of diesel and crude oil released over the next four months.
The release will be coordinated through the International Energy Agency and is intended to increase supply and help stabilise energy prices.
For Denmark, the move could take some of the pressure off diesel prices, according to Jens Nærvig Pedersen, senior commodities analyst at Danske Bank.
But motorists should not expect prices to return to normal immediately.
“It is not the grand solution that can cause prices to fall again,” Pedersen told Ritzau.
“It does not solve the supply crisis in the oil market, which is primarily due to the conflict in the Middle East.”
Diesel has hit a Danish record
The price of diesel at Danish filling stations reached a record DKK 19.19 per litre in September.
The additional supplies from G7 reserves could help cushion the market, Pedersen said, but they cannot fully replace the supplies currently missing from the Middle East.
“For us to get lower and more normal prices again, a solution must be found to the current supply crisis,” he said.
The G7 announcement has already had an impact on international energy markets, with oil prices beginning to fall following the decision.
Why is the G7 releasing its reserves?
The decision follows mounting concern about global fuel supplies and sharply rising prices linked to the conflict in the Middle East.
It also comes after US President Donald Trump raised the possibility of stopping US diesel exports to Europe.
Europe is heavily dependent on imported diesel, making any restriction on US exports potentially significant for European supplies and prices.
Following the G7 agreement, Trump said Friday that he would not impose a diesel export ban.
The G7 countries have also agreed not to introduce restrictions on energy exports between member countries.
What happens to Danish fuel prices now?
The release of emergency reserves increases the amount of oil and diesel available on the market and could therefore put downward pressure on prices.
But the underlying problem remains the shortage of supply caused by the conflict in the Middle East.
That means Danish motorists could see some relief at the pump without necessarily seeing a return to the prices that prevailed before the current energy crisis.
The G7 consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Source: Ritzau