G7 launches an "oil price cooling war"! Release of 100 million barrels of oil reserves combined with Trump abandoning the embargo, global inflation welcomes a key pressure relief valve.

U.S. President Donald Trump said he will not announce a unilateral ban on U.S. diesel exports after the G7 and its partners agreed to release part of their emergency fuel reserves to curb soaring prices. The G7's emergency large-scale reserve release combined with maintaining open trade flows will jointly ease the diesel shortage, potentially reducing cost pressures on transportation, agriculture, and manufacturing. The reserve release alleviates immediate supply tightness, while abandoning the embargo reduces the risk of market fragmentation. Together, the two measures improve fuel supply expectations. Although Western countries' energy supply emergency response has been fully launched, driving a temporary cooling of energy inflation, whether energy inflation can continue trending downward remains a major unknown. Investors' focus is shifting from crude oil barrel counts to refined product deliveries, major refinery utilization rates, and energy shipping efficiency. The effectiveness of the policy will be determined by actual supply delivery. The G7 coordinated reserve release pushed by French President Emmanuel Macron has escalated from a discussed plan to an action commitment; Trump subsequently made clear that the U.S. will not implement a diesel export ban. This oil supply policy package can be described as targeting two major energy inflation pressures simultaneouslyeasing immediate oil supply tightness through reserve releases, and preventing further fragmentation of U.S. and European diesel market prices by maintaining cross-border trade. The G7 and partners plan to coordinate the release of up to 100 million barrels of reserves over four months, with a concentrated release of large volumes of diesel in the first 20 days, while coordinating refinery maintenance and raising utilization rates where conditions permit. However, for investors, what needs to be accurately distinguished is thatthe latest development is a crude oil and refined product reserve arrangement, not new crude oil production capacity; officials have also not yet clarified the final product allocation ratios. "Europe has plenty of diesel, and they will make a major energy contribution to global supplyso will we," Trump told reporters at the White House on Friday local time. "Therefore, we will not implement an export ban." The group, composed of major economies from Europe, North America, and Asia, agreed on Friday to release up to 100 million barrels of emergency crude oil and diesel resources after strong pressure from the Trump administration. "I did make that request to them, and we will get a lot of oil," Trump added. "They've done a very good job." Trump's remarks came as diesel and a range of refined products are experiencing record price surges. Diesel provides core energy power for a large number of activities in the modern economy, including driving agricultural machinery, supporting America's extensive transportation industry, and providing heating and electricity for rural communities. Diesel can be described as the lifeblood of transportation and commercial activity, and its critical role means that price increases have already transmitted throughout the economy, driving up the cost of various consumer goods, with the November U.S. midterm elections approaching. The president's decision means he has retreated from his previous position of considering restrictions on diesel exports, and has also rejected the demands of some Republicans in rural and Midwestern areas facing tight races. These individuals had called for energy export restrictions to lower fuel prices that are weighing heavily on voters before the election. Trump insisted on Friday that a diesel export ban was never seriously considered as an option. "We never intended to do that," he told reporters. "I don't think we did." However, last month, the U.S. president said he had encouraged advisers to support the measure. Trump's current approach is also seeking a delicate balance between two core support groups: on one side, agricultural communities in America's heartland, where some Republican incumbents are facing difficult races; on the other, oil interest groups that benefit from the president's support for traditional fossil fuel policies, such as ExxonMobil and Chevron, the two largest traditional energy giants globally. In recent weeks, several prominent Republicans, including Iowa Senator Chuck Grassley and Alaska Senator Dan Sullivan, who is facing a fiercely contested re-election race, have pushed for export restrictions. However, oil industry leaders and energy experts have once again warned that restricting diesel sales abroad can at best bring short-term price relief; subsequently, as domestic inventories swell and prompt U.S. oil producers and refiners to cut output, costs will quickly rise again. Some government officials, including Energy Secretary Chris Wright and Interior Secretary Doug Burgum, have also expressed similar concerns internally. Before the midterm elections, the cost of fuel and other consumer goods is one of voters' primary grievances. Diesel prices have been particularly prominent, as wars in Russia and the Middle East have shut down some refining facilities and disrupted energy transportation. According to AAA data, as of Friday, the average U.S. diesel retail price was $6.37 per gallon. The oil reserve release announced on Friday and coordinated by the International Energy Agency is expected to bring only short-term relief. French President Emmanuel Macron said on Friday that the relevant supplies will be released over the next four months, with the initial energy release focused on diesel. Europe is highly dependent on U.S. diesel exports, and this reserve release is seen as a measure to avoid a U.S. ban on fuel sales abroad. G7 countries have now reaffirmed their commitment to "not impose export restrictions on energy and energy products" among member states. In the U.S., oil company executives have been urging Trump administration officials to consider alternatives, warning that even short-term export restrictions would trigger domestic production cuts and harm U.S. allies in Europe and Latin America. Under a plan the Trump administration is seriously considering, the Trump administration would remove restrictions on the sale of red or dyed diesel. This type of diesel is typically used for off-road purposes and has long enjoyed tax-exempt treatment. The plan would allow retailers to sell dyed diesel exempt from the 24-cent-per-gallon federal excise tax for use in trucks and other highway vehicles. Overall, the Trump administration is seriously considering relaxing restrictions on the sale and use of dyed diesel. This type of diesel, typically red in color, is mainly used for off-road operations and enjoys tax-exempt treatment. If the plan is implemented, retailers would be permitted to sell this diesel to trucks and other highway vehicles while retaining its exemption from the 24-cent-per-gallon federal excise tax. 100 million barrels launch a "diesel cooling war," embargo threat exits, oil prices rebound after sharp intraday drop The G7 and partners plan to coordinate the release of up to 100 million barrels of reserves over four months, with a concentrated release of large volumes of diesel in the first 20 days, while coordinating refinery maintenance and raising utilization rates where conditions permit. Driven by this news, oil prices did indeed see a significant pullback on Friday, but this description only applies to intraday trading sessions. The final settlement performance shows that oil prices experienced a sharp intraday plunge followed by a strong rebound. News of the G7 countries' coordinated reserve release pushed Brent briefly below $100 per barrel, before it noticeably recovered its losses; ultimately Brent closed nearly flat, while WTI crude retained a more significant decline. Based on February 27the last trading day before the war broke out on February 28energy prices remain significantly above pre-war levels. October 2 settlement prices show that the international crude benchmarkBrent crude closed at $102.25 per barrel, ultimately down 0.06%, rebounding after briefly falling below $100 intraday; WTI crude closed at $91.11 per barrel, down 1.90% on the day; Brent and WTI crude futures are up 41% and 36% respectively compared to the last trading day before the U.S.-Iran war broke out. On the supply side, Saudi Arabia is accelerating the restoration of energy delivery capacity that bypasses the Strait of Hormuz. According to media reports citing informed sources, Saudi Arabia's east-west pipeline throughput is approaching 6 million barrels per day, approximately 86% of its 7 million barrel design capacity; after deducting West Coast refinery demand, approximately 4.5 million barrels are available for export. What is being restored here is transportation capacityavailable export flows are not equivalent to already-loaded export volumes. From Yanbu port, northbound to Europe can go through the Suez Canal, while southbound to Asia typically requires passing through the Bab el-Mandeb Strait. Therefore, bypassing Hormuz does not mean the entire transportation route has escaped security constraints. The Middle East situation still presents a parallel state of "energy transportation recovery, military risks persisting": some energy transportation through Hormuz has increased, but there are still cases of vessels passing with identification signals turned off; the U.S. continues to deploy a third aircraft carrier and reinforcement troops, while Iran maintains indirect contact through Qatar while preparing to expand retaliation in the event of a new large-scale strike. As energy shipping through the Strait of Hormuz continues to face military strikes and blockades, in the direction of the Bab el-Mandeb Strait, media recently disclosed that Saudi Arabia is planning to support Yemeni forces in launching an offensive against Houthi armed groups to improve Red Sea shipping lane security. The operation has not yet been implemented. Meanwhile, media reports citing informed sources say that late Friday local time, a large crude oil tanker was hit by an unidentified projectile approximately 4 nautical miles east of Oman, with the crew safe. Reserve release opens the energy cost relief valve, but long-duration government bond markets are still repricing inflation and fiscal pressure The G7 coordinated reserve release and the U.S. abandoning the diesel export ban provide dual support for easing global energy costs: supplementing short-term supply and maintaining cross-border trade flows. Diesel is widely used in freight, agricultural machinery, and industrial activities, and its price changes affect corporate profits and consumer prices through transportation and production costs. The International Energy Agency noted that Middle East crude oil exports have clearly recovered, but refined product supply remains severely constrained, with attacks on Russian refineries further exacerbating diesel tightness. Therefore, prioritizing diesel releases, coordinating refinery maintenance, and improving available capacity utilization more specifically addresses the current supply bottleneck. The positive effect of this round of coordinated policy is to buy time for refineries and the transportation system to recover. Up to 100 million barrels of reserves will be released over four months, with large volumes of diesel scheduled for release in the first 20 days. However, market traders may focus more on the actual energy delivery speed in the Middle East and globally, the product composition, and whether subsequent supply can continue, rather than judging the price decline solely based on the announced total volume. Improved energy supply helps ease inflation pressure, but long-term government bond yields in global financial markets are simultaneously affected by policy rate expectations, bond supply, and term premiums. After Friday's U.S. nonfarm payrolls release, the 10-year Treasury yield briefly fell to about 5.157%, then rebounded to 5.281% in late New York trading, actually rising about 4.7 basis points on the day; U.K. long bonds recovered modestly. These latest signs all indicate that government bond markets in various countries are still pricing based on their own inflation, fiscal, and monetary policy conditions. From an investment perspective, improved diesel supply first benefits transportation, agriculture, and manufacturing companies in controlling costs; for popular AI infrastructure companies in the semiconductor and AI computing power theme, the positive impact may also transmit further through easing inflation expectations, improved financing conditions, and recovering risk appetite. Lower energy costs create favorable conditions for valuation recovery, while the actual extent of recovery still depends on the trajectory of 10-year and longer long-term risk-free yields, bond market credit spreads, and the combined changes in earnings expectations of those core companies with high index weights related to AI computing power.