Oil prices fell sharply on Friday as markets reacted to reports that European countries and members of the International Energy Agency could release millions of barrels of emergency fuel and crude reserves to ease a tightening global supply situation.
Brent crude futures for December delivery dropped 3.1% to $99.13 a barrel, while U.S. West Texas Intermediate crude for November delivery fell 4% to $89.18.
The decline came after reports that European Union governments were considering a French proposal to make additional diesel stocks available, while IEA members could release crude oil from their strategic reserves.
The proposal, reported by Reuters, would involve EU countries releasing about 50 million barrels of diesel, while IEA members would make another 50 million barrels of crude available, according to a person familiar with the discussions.
The reported move reflects growing concern among governments over soaring diesel prices and disruptions to global energy supplies.
CNBC was unable to independently verify the proposal. A spokesperson for the French government and the International Energy Agency were not immediately available for comment.
EU member states were due to hold crisis talks on Friday to consider a coordinated response to the diesel shortage. The discussions followed increasing pressure from Washington for European countries to tap their reserves and put additional supplies on the market.
U.S. Treasury Secretary Scott Bessent publicly urged America's European allies to act quickly, saying the region should increase supplies to help contain the effects of the disruption.
In a social media post on Thursday, Bessent said America’s European partners “should accelerate delivery on their existing commitments and make additional supplies immediately available to address ongoing disruptions.”
He added: “American farmers, truckers, and businesses should not be left carrying the burden of a global diesel shortage.”
The comments came as concerns about the availability and cost of diesel continued to weigh on businesses and consumers. Diesel is particularly important to the transportation, agricultural and industrial sectors, meaning prolonged shortages can raise the cost of moving goods and operating heavy machinery.
The European Union is particularly exposed to changes in global diesel trade. According to the International Energy Agency, the United States supplied about half of the bloc’s diesel imports in August, highlighting the potential impact of any disruption to American fuel exports.
U.S. President Donald Trump has repeatedly raised the possibility of restricting diesel exports as governments attempt to manage domestic fuel supplies. However, his position appeared to soften earlier this week as crude oil flows through the strategically important Strait of Hormuz recovered.
The waterway, through which a significant share of the world's oil supply passes, has become a major focus of energy markets amid the continuing conflict in the Middle East. Any prolonged disruption to shipping through the strait could further tighten global crude and refined-fuel supplies.
Oil prices had risen in the previous trading session after reports that the United States was deploying a third aircraft carrier strike group to the Middle East, accompanied by an amphibious force carrying about 2,000 Marines.
The reported military deployment added to concerns that the months-long conflict could escalate, potentially threatening energy infrastructure and key shipping routes.
Friday's sharp decline therefore marked a reversal from the previous session, with traders instead focusing on the possibility that governments could intervene by releasing emergency reserves.
For oil markets, the proposed releases could provide short-term relief by increasing the availability of diesel and crude at a time when traders are closely watching supply disruptions, geopolitical tensions and the flow of petroleum products between major producing and consuming regions.
However, the scale and timing of any coordinated release remain uncertain, and governments have yet to publicly confirm the reported 50-million-barrel diesel and crude proposals.
The market reaction underscores the sensitivity of oil prices to both geopolitical developments and government intervention, with traders weighing the potential impact of emergency stock releases against the risk of further disruptions in the Middle East.