Macron plans to convene G7 to stabilize oil prices, release of reserves expected to drive crude oil pullback! However, the refined oil supply crisis remains unresolved

According to Zhitong Finance APP, French President Emmanuel Macron spoke with the leaders of the United States and Canada on October 2 local time and plans to convene a G7 leaders meeting as soon as possible to help curb the continued rise in fuel prices, focusing on alleviating the global supply shortage of refined oil products.

According to a statement from the French Presidential Office, France, which holds the rotating presidency of the G7 this year, is actively working with the International Energy Agency (IEA) to coordinate measures aimed at easing price pressures and ensuring the supply of crude oil and refined products.

Macron emphasized that G7 countries "are taking joint actions that do not impose restrictions on energy exports, which is in the common interest." Overall coordination at the European level is also advancing.

European countries have been holding emergency consultations to discuss how to respond to pressure from Washington to release strategic fuel reserves and to avoid a possible U.S. energy export ban. Facing global market turmoil triggered by geopolitical conflict, Europe's pace of tapping emergency oil reserves has been significantly slower than the U.S., leaving the region with a considerable volume of reserves that can still be released.

G7 Races to "Cool Off Energy Valve"! Oil prices retreat, but pressure on refined fuel supply remains

Macron’s effort to push for G7 coordination this time centers on simultaneously cooling fuel price increases and alleviating the global refined oil supply crunch, while avoiding further market fragmentation from export restrictions.

France is working with the IEA to coordinate crude and refined oil supply measures; the latest developments show that European countries have discussed a proposal by France: Europe would release 50 million barrels of diesel, and IEA members would release 50 million barrels of crude oil. This plan is still under discussion, and comes as the US has asked Europe to speed up the release of diesel stocks and is considering restricting its own diesel exports.

Expectations of reserve releases have already helped ease prices. At around 17:00 Beijing time on October 2, Brent crude oil futures stood at $99.48/barrel, down 2.77% on the day; WTI was $89.52/barrel, down 3.61%; European diesel benchmark futures fell over 5% to $1,377/ton. Using the last trading day before the outbreak of war on February 28—settlement on February 27—as a benchmark, the nearest month crude oil futures prices have changed as follows: Brent and WTI crude prices are still up about 38% and 35% respectively. This comparison, using the nearby month futures base at each time, shows that even after a recent drop, energy prices are still significantly higher than before the conflict.

Geopolitically, diplomatic contacts continue while the risk of military escalation persists. Media reported on October 1 that Iran is still pursuing talks via Qatar, while preparing broader responses should the U.S. resume large-scale strikes; The Wall Street Journal recently revealed the U.S. is sending a third carrier strike group and about 9,000—10,000 personnel to the Middle East. Therefore, the recent pullback in oil prices reflects supply recovery and anticipated policy intervention, but cannot be regarded as a complete disappearance of the war risk premium.

From Straits to Bond Markets: The “Fuel Supply Guarantee Line” is Also a Global Risk Asset Buffer

The Saudi east-west pipeline is recovering, but there remains a significant gap between its nominal capacity and actual throughput. The pipeline resumed operations on September 22, with Yanbu Port subsequently reloading shipments; as of September 29, media reports indicate a flow of around 2–2.65 million barrels/day, well below the nominal 7 million barrels/day. Kpler then estimated that it could reach 3–4 million barrels/day soon, but reaching the pre-attack level of about 5.5 million barrels/day may still require another month. This 7 million barrels is transport capacity and should not be equated with the current increase in market supply.

Hormuz is reopening to passage, but risks remain for alternative routes via the Bab-el-Mandeb Strait. At the end of September, Kpler estimated that about 9.719 million barrels/day of crude were exported through Hormuz that month, showing the strait was not fully closed; but shipping intelligence agencies reported that three tankers were struck by unknown projectiles during passage on September 29. In the Red Sea direction, the Houthis advanced to the Perim Island at Bab-el-Mandeb in September, while on October 2 the Yemeni government announced 20 air strikes on Houthi targets near Taiz. Shipping south from Yanbu to Asia still faces risks at Bab-el-Mandeb; shipping north through Suez to Europe avoids Bab-el-Mandeb, so the two export routes should not be mixed up.

The most crucial bottleneck has emerged in the refining and refined oil trading segments. The IEA’s September report shows that global refinery throughput in August decreased by 4.2 million barrels/day year-on-year, with Gulf nations’ net diesel exports at only about 390,000 barrels/day—just over a quarter of prewar levels. This explains why diesel could remain tight even after crude export recovery: crude needs to be processed by available refineries and delivered through smooth trade networks. Releasing diesel reserves can directly supplement fuel at the terminal; the effect of releasing crude reserves depends on whether the refining and transportation links can pick up. If major exporters simultaneously restrict refined oil exports, domestic supply guarantees may further raise fuel costs in import regions—which is exactly why Macron emphasized joint action and avoiding export restrictions.

This energy chain is now linked to global bond markets. On October 1, the yield on the U.S. 10-year Treasury spiked to 5.34%, a new high since 2002, and on the morning of October 2 returned to about 5.24%; the UK’s 30-year yield previously broke 6% for the first time since 1998, but also fell as oil prices retreated. The latest moves in long-dated bonds can be summarized as “partial correction after multi-year highs,” rather than a continued one-way surge. Relief from energy pressures helps improve inflation and policy rate expectations, but fiscal supply, actual capital demand, and term premiums will still affect long-term pricing.

This is why, as some analysts see it, the “resumption of navigation” is not yet equal to “fuel relief,” while the guarantee line for refined oil supply is also a key buffer in the valuation system for stocks, cryptocurrencies, high-yield corporate bonds, and other global risk assets. Diesel costs are passed through transport, agriculture, and industrial production to prices; if energy price pressures persist, it could continue to limit monetary policy easing, push up long-term sovereign yields, and increase the discount pressure on risk assets.