Why has Nike lost its shine?

Leanna Burr (0:01)

The G7 reaches for the emergency fuel tap to bring down the price at the pump.

Danny McCubbin (0:05)

This is just taking a biscuit.

SPEAKER_3 (0:07)

Too high for me.

Adriana Urbano (0:08)

It's really bad.

SPEAKER_3 (0:09)

But sometimes it's not worth it with these prices.

Leanna Burr (0:12)

It's World Business Report from the BBC World Service. I'm Leanna Burr, and the G7 has agreed to release millions of barrels from our emergency reserves in an effort to bring fuel prices down. But will it be enough to take the heat out of the diesel market? Nike admits it has significant work to do in China as sales their slump, and the Italian home is on sale for just one euro. But how much does that bargain really cost?

Diesel prices have been on the up and up, and it's hitting drivers' pockets.

Matt Powell (0:50)

Before, we used to spend like 15 pounds. Now, it's almost like double, and it's no good, you know.

SPEAKER_3 (0:56)

Every day, you think about, have I got enough fuel? Where am I going to find reasonably flat-priced fuel?

Jacques Royzen (1:03)

I'm going to have to sell my car.

Chris Lowe (1:06)

I can't afford to keep this car, so I'm going to have to get something a bit more economical.

Leanna Burr (1:09)

President Donald Trump had been threatening to restrict US diesel exports in an effort to bring down prices at home, while also pressing Europe, which relies heavily on American supplies to release more fuel from its own reserves. And now G7 countries have agreed to do just that. They will release 100 million barrels of crude oil and diesel from strategic stockpiles over the next four months, with a substantial amount of diesel due to be released in the first 20 days. Here is French president Emmanuel Macron.

Emmanuel Macron (1:45)

This joint decision and this unity should bring prices down. The volumes that are also being released will smooth the functioning of the market and push prices down. And so normally, regardless of any events that might happen again, all of this is moving in the right direction. We have all jointly committed to releasing these strategic reserves in the proportions I mentioned, with priority given to diesel, and we have all committed to ensuring that there will be no export bans. President Trump, in particular, was very clear on this point, and I think that this is very positive, and it increases coordination between the various stakeholders.

Leanna Burr (2:25)

Of course, fuel prices have risen sharply since the start of the US and Israeli war with Iran. President Trump welcomed the agreement on social media, saying Europe had agreed to release what he called a massive amount of its diesel stocks, with the process beginning immediately. Here's the president's economic adviser, Kevin Hassett.

Kevin Hassett (2:43)

We've had conversations with our European friends. The president is talking to our allies about these matters, and we expect that there's lots of room for positive news.

The Europeans have a different strategic reserve than the US. Ours is crude, and there's this refined product, and they have a massive, massive amount of refined product, especially diesel, and so we think that they have room probably to help the world economy right now.

Leanna Burr (3:12)

The 100 million barrels will be a mixture of crude oil and diesel, although the exact split hasn't been announced. Oil prices initially fell on the news. Brent crude briefly dropped below $100 a barrel, before recovering to around $102.

Before the war with Iran began, it had been trading at roughly $73.

With Mina now is Tom Kloza, Chief Energy Advisor at Gulf Oil. Tom, hello.

Tom Kloza (3:37)

Hi, nice to join you today.

Leanna Burr (3:39)

It's great to have you, Tom. So just give us the context of this. How significant is the release of that crude and diesel when the market is so tight?

Tom Kloza (3:50)

I think it will help for October. But in reality, it's pretty underwhelming. I mean, if you divide the numbers up and you go through the arithmetic, it might mean another 415,000 barrels a day of diesel being released.

The world uses 30 million barrels a day. And so, you know, it's not really that much. And when you compare it to what was lost from Russia, you know, Russia was typically exporting 800,000 barrels a day not that long ago. So it's not an incredible or a massive sum, as though some of the people on in the political sphere have mentioned.

Leanna Burr (4:28)

Now, why is it diesel that has the particular problem here?

Tom Kloza (4:32)

Well, diesel is the highest use product across the globe. And if you think about emerging economies, what do they need first? They need diesel to power agriculture, industry, metals, you name it.