G7 to take ‘necessary measures’ to support energy supplies
G7 to take ‘necessary measures’ to support energy supplies
Following the US-Israel conflict with Iran, oil prices spiked sharply as fears of prolonged supply disruptions grew. G7 nations declared their willingness to act decisively to stabilize global energy markets. However, a recent virtual gathering of G7 finance ministers and the International Energy Agency (IEA) concluded without a decision to tap strategic crude reserves. The oil price reached $119.50 per barrel on Monday, a 25% surge, before retreating to around $102. This volatility triggered declines in major global stock markets.
IEA warns of market instability
At the meeting, Fatih Birol, the IEA’s chief, noted that oil markets had worsened recently. He highlighted challenges like restricted shipments through the Strait of Hormuz and reduced production levels. “This situation is creating significant risks for the market,” Birol stated. He added that IEA members hold over 1.2 billion barrels of emergency oil stockpiles, with an additional 600 million barrels controlled under government terms.
“We are not there yet,” said French Finance Minister Roland Lescure, addressing whether emergency reserves would be released. If such a move occurs, it would mark the first time since Russia’s invasion of Ukraine in 2022. The G7 reiterated its readiness to support energy supplies, including potential reserve releases, in a post-meeting statement.
Chancellor Rachel Reeves of the UK emphasized the meeting’s focus on calming tensions in the Middle East. She assured security for vessels in the region and called for “immediate de-escalation.” The war between the US and Israel has nearly halted oil traffic through the Strait of Hormuz, which typically handles about a fifth of global supplies. Over the weekend, attacks on Iranian oil facilities and retaliatory strikes in the Gulf intensified, prompting rapid market reactions.
Saudi Arabia reported intercepting and destroying two drone waves targeting a key oilfield. UK gas prices for future delivery surged nearly 25% to 171p per therm on Monday, later easing to 149p. While gas prices have more than doubled since the war began, they remain below the 640p peak seen in 2022 after Russia’s invasion. US President Donald Trump dismissed concerns about rising oil costs, asserting, “Short term oil prices… are a very small price to pay for Safety and Peace.”
Paul Gooden, head of natural resources at NinetyOne Asset Management, told the BBC’s Today programme that the conflict’s duration remains a critical uncertainty. “The longer it continues, the more anxious oil markets will become,” he said. He predicted prices could climb to $120-$150 per barrel, where demand might shrink as consumers cut back. “A temporary spike in this range is possible,” Gooden noted, “but sustained levels are unlikely.”
Financial markets in the US and UK showed mixed responses. US stocks dipped, with the S&P 500 losing 0.2% and the Dow Jones falling 0.5%. London’s FTSE 100 rebounded slightly, ending the day down just 0.3% after an initial plunge of 1.86%.