Oil (USO) Price on Solana

G7 members agreed on Friday, October 2, to release 100 million barrels of diesel and other strategic reserves through the International Energy Agency. The release starts immediately and runs over four months, with what leaders described as a "frontloaded substantial diesel release" in the first 20 days. The deal follows pressure from the Trump administration for Europe to draw down its diesel stocks. The war in the Middle East and the Russia-Ukraine conflict have squeezed fuel supplies, and European diesel hit a record €2.24 per litre, up from €1.59 before the Iran war began on February 28. U.S. retail diesel averaged about $6.50 a gallon last week.

Members also pledged not to restrict energy exports to one another and urged producers to avoid export bans. "We all committed to releasing strategic reserves… prioritising diesel—and we all pledged that there would be no export bans," French President Emmanuel Macron said. European and U.S. diesel futures fell after the announcement. Brent crude slipped 1.48% to $100.8 a barrel and West Texas Intermediate fell 2.66% to $90.40, according to The National, though CNBC reported that Brent later recovered some of its early losses.

The Trump administration has pressed European allies — particularly France and Germany — to release their strategic diesel reserves "immediately," as the ongoing U.S.-Iran war has pushed average U.S. diesel prices more than 70% higher to \$6.39 per gallon, according to AAA. Treasury Secretary Scott Bessent called on European partners to "accelerate delivery on their existing commitments and make additional supplies immediately available to address ongoing disruptions," framing cooperation as being in Europe's own economic interest. President Trump has also floated a potential ban on U.S. diesel exports to protect domestic supply, a threat EU Trade Chief Maros Sefcovic warned would have "very dramatic consequences" for European economic performance.

The pressure campaign reflects the downstream toll the Iran conflict is exacting on refined product markets beyond crude. EU member states are scheduled to hold coordinated talks with the European Commission on a crisis response, and French President Macron is planning a mid-October G7 video call on fuel price solutions. The episode underscores how tightened refinery margins and supply chain disruptions from the conflict are rippling through diesel and heating oil markets globally, with crude benchmarks remaining elevated as strategic reserve decisions and export policy uncertainty add further volatility.

Crude reversed early losses on October 1 after Reuters reported that Chinese refiners had suspended fuel exports for October. Citing multiple unnamed sources, Reuters said state oil major PetroChina cancelled several gasoline and jet fuel cargoes planned for the month as Beijing moves to protect domestic supply. CNBC said it could not independently verify the report. December Brent crude, the new front-month contract, rose 2.4% to $100.36 a barrel after trading about 1% lower earlier in the session. November WTI gained 2.5% to $92.70.

The export halt would take refined product out of a global market already squeezed by the U.S.-Iran war and Russia's invasion of Ukraine. It also lands just as crude supply from the Gulf was improving. Middle East crude flows were reported to be nearing pre-war levels, but gasoline supply has lagged. Saudi Arabia has restarted its East-West Pipeline and resumed tanker loadings at Yanbu. "The pipeline has done much of the heavy lifting when it came to moving crude out of the Gulf," said David Morrison, senior analyst at Trade Nation.

President Donald Trump has denied reports from Axios and CNN that Washington offered Iran sanctions relief and the release of frozen funds in exchange for concrete steps on its nuclear program. "This is untrue. I offered them NOTHING," he wrote on Truth Social, Reuters reported. That cuts against recent hopes that economic concessions could get the Strait of Hormuz reopened. Iran has restricted the strait throughout the eight-month war, and no deal to reopen it has been reached. Meanwhile, Iranian Foreign Minister Abbas Araqchi has presented a U.S. proposal to Iran's cabinet after meeting Qatari mediators in Doha, according to Arabian Business.

Qatari foreign ministry spokesperson Majed al-Ansari said Doha is "exchanging messages between the parties" to find common ground. Qatar also brokered the June memorandum of understanding that briefly halted fighting. Iranian President Masoud Pezeshkian said Tehran is ready for talks but will not accept "bullying or coercion." Oil prices settled 2.5% lower on Tuesday as the diplomacy continued, but they were still on course for a monthly gain because the Gulf supply disruption has not been resolved.

U.S. and Iranian officials held separate indirect talks with Qatari mediators on Monday, CNBC reports, reviving efforts to end the seven-month war that has choked oil flows through the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi met the mediators in New York after the UN General Assembly and said he expects Washington's reply to Tehran's revised ceasefire framework by Tuesday. The proposal asks the U.S. to release frozen Iranian funds, lift sanctions on Iranian oil and end the naval blockade of Iranian ports within four to five days, with nuclear talks to start within a week and the reopening of Hormuz tied to those terms. President Trump, who had already called the plan unacceptable, confirmed U.S. officials had spoken to mediators separately but gave no details, saying: "We're going to win. It's going to go pretty quickly."

Supply is recovering even without a deal. Kpler data show Middle East crude exports this month climbed back to just under 80% of pre-conflict levels, their highest since the war began in February. Flows through the strait itself are still well short of normal. Kpler's real-time tracking put total Hormuz clearances at about 10.6 million barrels a day on Saturday, against a pre-war baseline of roughly 17.1 million. Downstream, the pressure has not eased: U.S. retail diesel prices are hovering near their record $6.53 a gallon.

President Trump has rejected Iran's conditional offer to reopen the Strait of Hormuz, removing the nearest prospect of the key crude export route coming back online. "They made a proposal but I rejected it," Trump said of the seven-day plan Iranian Foreign Minister Abbas Araghchi sent through Qatari mediators, which would have reopened the strait and restarted nuclear talks in exchange for lifting the U.S. naval blockade of Iranian ports, releasing frozen funds and waiving oil sanctions. The Wall Street Journal reported that Trump privately doubts Tehran will meet his demands and has told staff he expects to resume bombing Iran after the midterm elections.

For oil, the rejection reverses the optimism over a phased Hormuz deal that had pushed prices lower earlier in the week. Araghchi said Iran is still waiting for Washington's formal answer through mediators and that "only a negotiated solution" can end the deadlock, so talks have not formally collapsed. Supply risk around the Gulf remains high in the meantime: the Saudi-led coalition in Yemen said it intercepted two Houthi drones aimed at Riyadh and two ballistic missiles fired toward Khamis Mushait. The Houthis have maintained a declared maritime blockade against Saudi Arabia since July.

Iranian Foreign Minister Abbas Araghchi has proposed reopening the Strait of Hormuz and restarting nuclear talks with the U.S. within seven days, according to the Associated Press. Before the conflict, about a fifth of globally traded oil and gas passed through the strait. The conditions go further than the blockade-for-shipping swap reported earlier in the week. Tehran wants the U.S. to lift its naval blockade of Iranian ports, waive sanctions on Iranian oil sales and observe a ceasefire that includes Lebanon. Araghchi laid out the plan at a private gathering on the sidelines of the U.N. General Assembly in New York. Initial steps would take four to five days, the strait would reopen on day six, and talks on a final deal would begin on day seven.

The White House said U.S. officials were having "positive and constructive conversations with mediators" and that the U.S. is already "facilitating significant oil exports through the Strait of Hormuz." CBS News, citing a Wall Street Journal report, later said President Trump had rejected the proposal. The offer resembles a June arrangement that broke down soon after Iran resumed attacks on shipping.

Oil prices fell on Friday, giving back part of the previous session's rebound, after a report that U.S. and Iranian negotiators are discussing a phased deal to end the standoff in the Persian Gulf. CNBC reported that Brent crude for November delivery fell 1% to $93.66 a barrel, while U.S. West Texas Intermediate futures for November slipped 0.68% to $105.86.

A senior Iranian official told Reuters the most realistic path was for Tehran to allow shipping through the Strait of Hormuz in exchange for the U.S. ending its naval blockade. The two sides agreed to that approach in a June 17 memorandum of understanding, but it collapsed into renewed fighting soon after. Al Jazeera reported that Iran now wants the U.S. to return to the memorandum before the U.S. midterm elections. The move reflects traders taking some of the geopolitical risk premium out of crude as Gulf supply recovers and hopes for a diplomatic breakthrough grow.

Crude recovered on September 24, the day after it fell on hopes for U.S.-Iran diplomacy at the United Nations. CNBC reported that at 4:28 a.m. ET, November Brent futures were up 3.17% at $106.35 a barrel. November West Texas Intermediate had gained 2.56% to $94.52. Traders found little sign that talks were moving toward a diplomatic end to the Middle East conflict. At the UN General Assembly, Iranian President Masoud Pezeshkian blamed the U.S. and Israel for stoking global instability. He said Iran had been "the victims of terrorism" and would keep fighting "until our last breath." Merchant ships also remain anchored in the Strait of Hormuz.

Asian demand added to the move. Kpler data cited in the report shows Asia on course to import 23.96 million barrels per day of crude in September. That is up from 23.38 million bpd in August and the highest level since February, when the Iran war began. Tokenized oil products on Solana that track crude or oil-linked funds such as USO are exposed to the same geopolitical swings in the benchmark futures.