Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, said on Thursday that the labor market is not a major driver of the inflation that the US central bank seeks to reduce, adding that harming the labor market is not necessary to achieve this goal.
Kashkari told Bloomberg TV: “I do not think that is necessary, because the labor market is not the main source of inflation today, so I do not see the need for that.” His statements came in response to a question about whether he agreed with a colleague at the Federal Reserve who feared that high interest rates would lead to an increase in unemployment rates, according to Reuters.
He added: “But I do not want to completely rule out this possibility.” We have a dual mandate; One side of this mandate appears to be in a very good position currently, while the other side has remained far from achieving its target over the past five years.”
For his part, Jeff Schmid, President of the Federal Reserve Bank of Kansas City, said on Thursday that determining the impact of rising energy prices on inflation remains a major challenge for US central bank officials, who are trying to assess whether the current inflationary pressures will continue.
“This is perhaps one of the biggest challenges facing monetary policy today, namely understanding what lies behind this supply shock,” Schmid said, during a conference organized by the Federal Reserve Bank in Richmond on rural development, adding that the challenge is also to determine how long its impact on inflation rates may last.
American pressure on Europe has escalated to help calm the global diesel crisis, with Washington demanding the withdrawal of large amounts of emergency stocks, at a time when European Union countries began coordinating a common position on the step, while US Trade Representative Jamieson Greer conveyed the message directly to European partners at a G20 meeting.
Informed sources said that the administration of US President Donald Trump asked Germany and France to release part of emergency diesel stocks to help reduce global fuel prices, and hinted at the possibility of imposing a US ban on diesel exports if European countries did not respond.
Sources reported that Washington asked the European Union to release 120 million barrels of diesel during the next six months, according to Reuters.
This volume represents more than 40 percent of the emergency diesel and gas stocks in the European Union countries, which amount to about 39 million tons, according to the latest available data from Eurostat dating back to May 2025. The American demand is also equivalent to about a month of the Union’s total consumption of diesel and gas oil, according to Reuters calculations.
European movement towards a unified position
In Brussels, the European Commission, France, Italy, Ireland and Britain held a call on Thursday to discuss the potential need to release diesel stocks, according to a European Union official. Germany was not among the countries mentioned in this call, while Berlin and Paris were the focus of direct American demands.
In parallel, the European Union's "Oil Coordination Group" asked member states to confirm whether they had received direct communications from the United States regarding stocks, after one of the countries reported receiving a bilateral request from Washington, according to a memorandum seen by Bloomberg. The group, which includes representatives of the Commission and national governments, aims to gather the positions of countries in preparation for formulating a common European position.
This comes at a time when the European Commission said that it had discussed with the Executive Director of the International Energy Agency, Fatih Birol, the possibility of releasing additional stocks, without making a decision yet on asking member states to withdraw new quantities.
European Union rules require member states to maintain emergency oil stocks that cover at least 90 days of net imports or 61 days of domestic consumption, whichever is greater, while the Union as a whole currently meets these requirements.
Germany and France are at the heart of European stocks
Germany and France stand out in this confrontation due to the size of their reserves, as Germany has about 5.6 million tons of diesel and emergency oil gas, compared to 8.2 million tons for France, which together constitute about 35 percent of the European Union’s total strategic reserves, according to Eurostat data.
The US administration is particularly concerned about the two countries, as Washington believes that they have not fully implemented previous pledges to release oil stocks and emergency oil products, according to sources familiar with the discussions. The United States had raised this issue with the International Energy Agency, which coordinates the release of stockpiles among member states.
Germany denied that the International Energy Agency had asked it to withdraw its strategic oil reserves.
An official at the Elysee Palace said that French President Emmanuel Macron did not discuss the issue with Trump during their meeting on the sidelines of the United Nations General Assembly meetings in New York last week. But he explained that Macron will hold a video conference with the leaders of the G7 countries to discuss the rise in fuel prices and the availability of refined oil products globally, including coordinating the release of reserves in cooperation with the International Energy Agency.
Greer conveys the message to the G20 group
In an indication of the expansion of the American move, US Trade Representative Jamieson Greer said on Thursday that he had spoken with his French counterpart about the idea of releasing stocks, and that he would raise the issue with other European officials and partners during the G20 meetings in Milwaukee.
Greer said that Washington wants a “cooperative response” from its European allies, at a time when the administration seeks to increase supplies of refined products and reduce fuel costs.
Gharir's move comes at a time when the US administration is considering several options to reduce diesel prices locally, including restricting US fuel exports. But Trump indicated on Wednesday that his enthusiasm for the export ban had declined due to the potential risks of rising prices for other types of fuel. Oil companies also warned that banning exports could lead to adverse results, including raising the prices of other fuels.
US Energy Secretary Chris Wright said on Wednesday that the administration expects European announcements to be issued soon regarding new supplies of diesel, noting that the markets have lost exports from the Middle East and China, despite the beginning of the return of some supplies from the region.
China increases pressure on diesel market
The pressures on Europe come at a time when global sources of supply are shrinking. Chinese refineries have suspended exports of petroleum products for the month of October, with the exception of shipments destined for Hong Kong and Macau, in a move aimed at preserving domestic stocks amid global supply disruptions.
Market estimates indicate that Chinese commercial diesel stocks are about 20 million barrels less than the level that the authorities consider sufficient before resuming exports, while gasoline stocks are less than about 9 million barrels, which enhances the possibility of continued restrictions on exports of Chinese petroleum products.
Supplies of refined products from the Middle East have also declined as a result of wartime disruptions, while attacks on Russian refining facilities have put further pressure on global supply. Analysts said that the cessation of China's exports deprives the market of a flexible source of supplies, at a time when alternatives for importers are shrinking.
Oil stocks
The US request reopens the debate on the balance between using strategic stocks to calm prices and maintain them in anticipation of longer or more severe disruptions.
The International Energy Agency agreed in March to release about 400 million barrels of crude oil and fuel from emergency stocks globally, with the United States providing 172 million barrels, while European Union countries committed to providing 20 percent of the total quantity.
Last week, the United States offered to lend energy companies up to an additional 40 million barrels of its strategic reserve, as the final American payment within the global agreement. But US Strategic Petroleum Reserve stocks fell to less than 284 million barrels, the lowest level since 1982.
At the same time, Europe faces a special dilemma, after it reduced its dependence on Russian fuel and banned its imports, while its refining capacity declined over the past two decades, making it more dependent on diesel imports, especially from the United States. Supply disruptions from the Middle East increase the sensitivity of the European market to any additional shortage.
These developments come as diesel prices have risen to record levels or close to them in a number of markets, putting pressure on transportation, agriculture and industry costs, and putting governments before a difficult test between quickly reducing prices and maintaining sufficient safety margins in emergency stocks.
