Exclusive-US tells France and Germany to release diesel stocks or face US export ban, sources say

By Kate Abnett, Jarrett Renshaw and John Irish

WASHINGTON/BRUSSELS/PARIS, Oct 1 (Reuters) - The Trump administration has told Germany and France to draw down emergency diesel inventories to help ease soaring global fuel prices or face a potential US diesel export ban, according to three people close to the discussions.

The warning marks an escalation in pressure on Europe as US President Donald Trump considers a potential ban to help bring down US fuel prices ahead of November's midterm elections.

Europe's relationship with Washington has soured under Trump due to tariffs disputes and disagreements over military spending.

For the EU releasing more stocks would represent a dilemma as it needs to balance the need to bring down fuel prices at home with maintaining high stocks for a possible worsening of the fuel crisis should Trump and Iran not reach a peace deal.

The European Commission, Germany, France, Italy, Britain and Ireland held a call on Thursday to discuss the possible need to release diesel stocks, two EU officials told Reuters.

The International Energy Agency, the West's energy watchdog, has not yet asked Germany to release stocks, Germany's economy ministry said. It was not clear when the IEA might meet next.

The US administration has been particularly frustrated with France and Germany, which US officials believe have not fully followed through on earlier commitments to release emergency oil and petroleum product stocks, Reuters has reported previously.

"It is in Europe’s best interest to work with the United States as we pursue multiple pathways to boost the supply of refined products and lower costs for consumers," one of the sources, a US official, told Reuters.

A second source, based in a European capital, said that the US has asked the EU to release 120 million barrels of diesel over the next six months.

Europe has become increasingly dependent on US fuel after banning Russian imports over Russia's invasion of Ukraine and after the US-Israeli war against Iran disrupted supplies from the Middle East.

US Energy Secretary Chris Wright told reporters on Wednesday that the US administration expected announcements from Europe soon regarding new diesel supplies.

"We've ​lost some diesel ​exports from the ⁠Middle East, although we're restoring those, and we've lost diesel exports from China," he said. "So that's a lot ​of interruptions."

The Iran war has disrupted one of the key sources of oil and fuel for the world. Russia has extended its ban on diesel exports until the end of October, adding further strain on the market, after Ukraine damaged many of its refiners. Chinese refiners suspended October fuel exports to bolster domestic stocks, sources said.

France's energy ministry declined to comment.

An official at the Elysee Palace said that French President Emmanuel Macron and Trump did not discussed the issue when they met on the sidelines of the UN General Assembly in New York last week.

However, the official said that Macron would convene a video conference of leaders of G7 countries to address rising fuel prices and the global availability of refined products, including the coordination of a release of reserves in conjunction with the International Energy Agency.

(Reporting by Jarrett Renshaw in Washington, Kate Abnett in Brussels and John Irish in Paris; additional reporting by Forrest Crellin and Michel Rose in Paris, Christian Kraemer in Berlin; writing by Dmitry Zhdannikov; editing by David Goodman and Jason Neely)