The G7 group of countries said on Monday (local time) that they were ready to take the “necessary measures” to support global energy supplies, the BBC reported.
The development comes as the US-Israel war in Iran entered its tenth day today, sending oil prices soaring to nearly $120 a barrel.
The G7 group includes Canada, France, Germany, Italy, Japan, the US and the UK. However, the meeting of finance ministers of the G7 and the International Energy Agency (IEA) ended without an agreement on the release of strategic oil reserves.
G7 virtual meeting
At a virtual meeting on Monday, the release of oil from stockpiles was among the options discussed to support global energy supplies. Fatih Birol, head of the IEA, said global oil markets had “deteriorated in recent days”. He added that along with problems associated with transit through the Strait of Hormuz, which Iran’s Islamic Revolutionary Guard Corps (IRGC) has closed since the start of the conflict, a significant portion of oil production has also been curtailed. According to Birol, this creates increasing risks for the market.
IEA member states currently hold more than 1.2 billion barrels of public emergency oil reserves and another 600 million barrels of industrial stocks held under government commitments, Birol noted.
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Will the G7 drain emergency oil?
Commenting on whether the G7 would release the emergency reserves, French Finance Minister Roland Lescure said the group was not there yet. However, after the meeting, the group said in a statement: “We are ready to take the necessary measures, including support for global energy supplies, such as the release of stocks.
If G7 members agree to release emergency oil, it will be the first time since 2022 when Russia launched a large-scale invasion of Ukraine.
Oil prices are soaring amid conflict between the US, Israel and Iran
Reuters reported that oil prices rose 10% today after easing from a session high above $119 a barrel, a level not seen since 2022, after Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries (OPEC) cut supplies due to cuts in the Middle East.
Brent futures were up 10.4% to touch $102.29 a barrel at 10:53 a.m. EDT (1453 GMT). U.S. West Texas Intermediate (WTI) crude jumped $9.21, or 10.1%, to $100.11
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Further disruptions to global energy supplies from the Middle East threaten to push prices up for consumers and businesses around the world. In addition, rising inflation could lead to less interest rate cuts by central banks.
Trump dismisses concerns about rising oil prices
US President Donald Trump has repeatedly rejected claims related to a sharp rise in oil prices. In a post on Truth Social on March 8, he said: “Short-term oil prices that will drop quickly when the destruction of the Iranian nuclear threat is over is a very small price to pay for US and world security and peace. ONLY FOOLS WOULD THINK OTHERWISE!”
Iran closes the Strait of Hormuz
Amid continued tensions in Iran, the closure of the Strait of Hormuz, a key waterway, is set to disrupt global oil supplies. Almost one fifth of the world’s oil reserves are transported through this waterway. In addition, companies in the Middle East are now invoking force majeure, a legal term that excuses them from fulfilling their obligations in the event of an unexpected event.
Iran is targeting energy facilities in the Middle East
Meanwhile, Iran has targeted energy facilities in neighboring Gulf countries. Saudi Arabia said overnight it had intercepted and shot down two waves of drones heading for a major oil field.
Read also | Saudi Arabia begins shifting oil exports to Red Sea amid Hormuz disruption
Until last week, markets remained relatively calm despite fears that millions of barrels of oil and liquefied gas could be stranded in the Persian Gulf.
But the weekend escalation, along with damage to energy infrastructure in Iran and across the Persian Gulf, prompted a sharp market reaction.
