G7 countries have agreed a coordinated release of 100 million barrels of emergency petroleum reserves in an attempt to stabilise global energy markets as surging fuel prices put pressure on households, businesses and the wider economy.
The release, coordinated through the International Energy Agency, is due to begin immediately and run over four months, according to a joint G7 leaders' statement published by the UK Government.
The agreement also provides for a front-loaded substantial release of diesel within the first 20 days by G7 members and partners.
G7 acts as fuel prices surge
G7 leaders said they were responding to what they described as unprecedented volatility in oil markets, with rising prices threatening economic stability and household finances.
Alongside the emergency stock release, the group agreed to coordinate refinery maintenance schedules in an effort to avoid simultaneous shutdowns and to temporarily increase refinery utilisation where feasible.
The G7 is also encouraging countries with significant refining capacity to increase production of refined petroleum products, particularly diesel.
The International Energy Agency has been asked to monitor implementation and the effect of the measures on energy security and market stability. G7 members are expected to meet through the IEA again in the coming days to consider whether further diesel releases are required.
Energy export restrictions rejected
The G7 also reaffirmed a commitment to refrain from imposing restrictions on energy and energy-product exports between member countries.
Reuters reported that the agreement followed pressure from US President Donald Trump on European countries to draw down emergency diesel inventories. The Trump administration had raised the possibility of restricting US diesel exports if European countries did not act.
Trump subsequently said the United States would not impose a diesel export ban.
That US pressure forms part of the reported background to the negotiations; the official G7 statement presents the agreement as a coordinated response to energy-market instability.
G7 condemns Iran over energy disruption
The leaders' statement also condemned Iran over attacks on neighbouring states and disruption to international trade and energy supplies.
The G7 called for the immediate and full restoration of navigational rights through the Strait of Hormuz and said members would continue efforts aimed at securing the free flow of commerce through the strategically important waterway.
The group separately confirmed that sanctions against Russia would remain in place while members work with the IEA and international partners to limit further disruption to fuel, gas and other commodity markets.
Oil prices react to reserve decision
International Energy Agency executive director Fatih Birol said oil prices had begun falling following the reserve-release decision. Reuters reported that Birol said prices had dropped by around five dollars following the announcement.
Market movements can be affected by numerous factors, however, and the reserve release does not guarantee a particular reduction in UK petrol or diesel prices.
What does the agreement mean for the UK?
Britain is a member of both the G7 and the International Energy Agency and maintains emergency oil stocks as part of its international obligations.
The latest G7 statement does not provide a country-by-country breakdown of the 100 million barrels or specify precisely how much of the release will come from UK stocks.
It also does not specify the final division of the 100 million barrels between crude oil, diesel and other petroleum products.
The immediate significance is therefore the scale and speed of the coordinated international intervention rather than any guaranteed reduction at British filling stations.
G7 leaders said concerns about energy prices remained a priority and that they were prepared to adjust the measures if necessary.