G7 ready to take ‘necessary measures’ over economic impact of Iran war
Finance ministers monitoring situation but stop short of agreeing to release emergency oil reserves
The G7 said it was ready to take “necessary measures” to address the economic impact of the US-Israel war on Iran, after a meeting prompted by soaring oil prices, which rose above $100 (£74) a barrel for the first time since 2022.
Following a remote meeting on Monday, G7 finance ministers said they would closely monitor the situation but stopped short of agreeing to release emergency oil reserves.
“We discussed the current conflict in the Middle East, its impact for regional stability, global economic conditions, and financial markets, and the importance of secure trading routes,” they said in a statement.
“We will continue to closely monitor the situation and developments in the energy markets and will meet as needed to exchange information and to coordinate within the G7 and with international partners.
“We stand ready to take necessary measures, including to support global supply of energy such as stockpile release.”
France’s finance minister, F, said they were “not there yet” on agreeing to release oil stockpiles.
Three G7 countries, including the US, have so far reportedly expressed support for the release of the emergency reserves, which are held by the International Energy Agency’s 32 member countries across the globe.
The IEA holds strategic reserves of petroleum as part of an emergency system designed to help countries withstand oil price crises. US officials believe a joint release in the range of 300m to 400m barrels would be appropriate, which would reportedly represent 25% to 35% of the 1.2bn barrels in reserve.
The EU’s oil and gas supply coordination groups would also meet on Thursday, a spokesperson said, as they monitor the impact of the conflict on the bloc’s oil supplies. EU countries are required to hold oil stocks covering 90 days’ worth of consumption.
The UK month-ahead gas price jumped by 19% to 163p a therm on Monday morning but the gains eased after the G7 meeting to 4% to 143p. The continental European month-ahead benchmark was up 5% at €56 (£48) a megawatt hour in afternoon trading.
At least five energy sites in and around Tehran were hit by strikes. Kuwait’s national oil company also announced a precautionary production cut amid retaliatory attacks by Iran.
The strait of Hormuz, through which about a fifth of global oil and seaborne gas tankers typically pass, has in effect been closed for a week.
Brent crude, the international benchmark, jumped by as much as 29% to $119.50 a barrel in early trading on Monday. This pared back after the G7 meeting, with Brent up 7% at $99.50 a barrel.
While Donald Trump has vowed to reduce inflation and energy costs, he said on Sunday the rise in oil prices was “a very small price to pay” for the US “and world, safety and peace”, describing it as a “short-term” consequence of the US-Israel war on Iran.
The Iranian regime warned that US-Israeli strikes risked pushing prices even higher. A spokesperson for the country’s Revolutionary Guard Corps said after strikes on energy sites: “If you can tolerate oil at more than $200 per barrel, continue this game.”
The emergency oil reserve system was set up as part of the creation of the IEA in 1974 after the Arab oil embargo, which triggered a jump in crude prices and a fuel crisis in the west.
Since its inception, the IEA has coordinated five collective releases from the reserves, with the last two in response to Russia’s invasion of Ukraine.