Economist Says G7 Oil Reserve Release May Offer Only Short-Term Relief

BERLIN, Oct 3 – The decision by Group of Seven (G7) nations to release 100 million barrels of crude oil and diesel from emergency reserves may offer motorists only short-term relief from high fuel prices, according to a German economist.

Speaking to dpa, Samina Sultan of the German Economic Institute (IW) noted that while the measure could temporary cushion price pressures, fundamental supply disruptions remain unaddressed.

“It can cushion the impact for a while, but the underlying problem remains,” Sultan explained, adding that the actual relief experienced at fuel pumps will depend heavily on the proportion of refined diesel included in the release.

Strait of Hormuz Bottleneck and Supply Risks

Sultan emphasized that a sustained normalization of global energy prices depends on restoring safe transit through the Strait of Hormuz. Recent trade disruptions in the maritime corridor have choked off crude exports and disconnected major regional refineries from international distribution networks.

Key factors highlighted by the analysis include:

• Escalating Maritime Threats: Reports from the United Kingdom Maritime Trade Operations (UKMTO) indicate that commercial tankers in the Strait of Hormuz have come under renewed fire, raising risk premiums for maritime shipping.
• Limited Impact of Reserves: If physical supply lines through the Strait remain obstructed, emergency reserve releases risk becoming merely “a drop in the ocean” against broader market deficits.
• Export Openness: Despite earlier US proposals suggesting domestic diesel export limits, the G7 explicitly committed to avoiding inter-member export bans or trade restrictions to maintain open energy distribution.

The emergency measure, coordinated through the International Energy Agency (IEA), pledges a 100-million-barrel release over four months, with G7 members actively discussing additional targeted releases of diesel.

–NMT