The G7 group of countries on Monday (local time) said it is ready to take “necessary measures” to support global energy supply, the BBC reported.
The development comes as the US-Israel war in Iran entered its tenth day today and sent oil prices surging to nearly $120 a barrel.
The G7 group includes Canada, France, Germany, Italy, Japan, the US, and the UK. However, a meeting between G7 finance ministers and the International Energy Agency (IEA) concluded without an agreement to release strategic crude reserves.
G7 virtual meeting
At the virtual meeting on Monday, among the options discussed to support the global energy supply was releasing oil from stockpiles. Fatih Birol, head of the IEA, said that global oil markets “have deteriorated in recent days”. He added that, along with the challenges of transit through the Strait of Hormuz, which Iran’s Islamic Revolutionary Guards Corps (IRGC) has closed since the start of the conflict, a substantial amount of oil production has also been curtailed. According to Birol, this is creating growing risks for the market.
The IEA member nations currently hold over 1.2 billion barrels of public emergency oil stocks, with an additional 600 million barrels of industry stocks held under government obligation, Birol noted.
G7 to release emergency oil?
Commenting on whether the G7 will release the emergency stocks, France’s Finance Minister, Roland Lescure, said that the group is not there yet. However, after the meeting concluded, the group, in a statement, said, “We stand ready to take necessary measures, including to support the global supply of energy, such as stockpile release.”
If the G7 member nations agree to release emergency oil, it will be the first time since 2022, when Russia launched a full-scale invasion of Ukraine.
Oil prices surge amid US-Israel, Iran conflict
Reuters reported that oil prices were up 10% today after easing from a session high of over $119 a barrel, a level not seen since 2022, following Saudi Arabia and other Organisation of the Petroleum Exporting Countries (OPEC) members slashing supplies due to disruptions in the Middle East.
Brent futures surged 10.4% to touch $102.29 a barrel at 10:53 AM EDT (1453 GMT). US West Texas Intermediate (WTI) crude jumped $9.21, or 10.1%, to $100.11
Further disruptions to global energy supplies from the Middle East threaten to push prices higher for both consumers and businesses around the world. Additionally, rising inflation could lead to fewer interest rate cuts by central banks.
Trump dismisses concerns over rising oil prices
US President Donald Trump has repeatedly dismissed claims regarding the surge in oil prices. In a post on Truth Social, on 8 March, he said, “Short-term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, are a very small price to pay for U.S.A., and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY!”
Iran shuts Strait of Hormuz
Amid ongoing tensions in Iran, the closure of the Strait of Hormuz, a key waterway, is set to disrupt global oil supply. Nearly one-fifth of the world’s oil supply is shipped through this waterway. Additionally, companies in the Middle East are now invoking force majeure, a legal term that excuses them from fulfilling obligations in the event of an unexpected event.
Iran targets energy facilities in the Middle East
Meanwhile, Iran has targeted energy facilities in neighbouring Gulf countries. Saudi Arabia said overnight that it had intercepted and shot down two waves of drones heading toward a major oilfield.
Until last week, markets had remained relatively calm despite fears that millions of barrels of crude oil and liquefied gas could be stranded in the Gulf.
However, the weekend escalation, along with damage to energy infrastructure in Iran and across the Gulf, prompted a sharp market reaction.
