Global oil markets are facing fresh turbulence as the conflict in the Gulf pushes crude prices sharply higher. In response, finance ministers from the Group of Seven (G7) countries are holding an emergency discussion to consider releasing oil from strategic reserves to stabilise markets, reported Financial Times.
The meeting comes at a time when rising
G7 finance ministers are scheduled to hold a call with Fatih Birol, executive director of the International Energy Agency (IEA), to discuss the impact of the ongoing war involving Iran on global oil markets.
According to people familiar with the discussions, the meeting is aimed at exploring whether member countries should jointly release oil from their emergency reserves. The call is set to take place at 8.30am New York time.
So far, three G7 countries, including the US, have expressed support for the idea of releasing oil from reserves if the situation worsens.
The IEA’s 32 member countries maintain strategic petroleum reserves as part of a system created to respond to severe disruptions in global oil supply.
One proposal under discussion suggests releasing between 300 million and 400 million barrels of oil. This would amount to roughly 25 to 30% of the total 1.2 billion barrels currently held in these reserves.
These emergency stockpiles were originally created in 1974 after the Arab oil embargo caused major fuel shortages and sharp price spikes across western economies.
Oil prices have risen dramatically since the start of the conflict.
Brent crude, the global benchmark, jumped as much as 24% in Asian trading on Monday to reach $116.71 a barrel. Prices later eased slightly but were still up nearly 19% at around $110.85.
West Texas Intermediate (WTI), the US benchmark, also surged. It climbed 28% to $116.45 before settling near $108 per barrel.
The surge has unsettled financial markets, with stock markets across Asia falling on Monday and US markets also expected to open lower. The sharp increase in oil prices is also creating political pressure in the US. Petrol prices have climbed quickly over the past week.
The average price of petrol in the US rose to $3.45 per gallon by Sunday, up from $2.98 just a week earlier. Analysts warn that prices could rise further if crude oil remains elevated.
Many large economies remain highly dependent on imported crude oil. Countries such as China, India, South Korea, Japan, Germany, Italy and Spain are among the biggest buyers of oil globally.
This leaves them particularly vulnerable to sudden spikes in prices.
According to an internal document prepared for the IEA meeting, member countries currently hold more than 1.24 billion barrels of public oil stocks. In addition, there are around 600 million barrels of industry stocks that could also be used if necessary.
Together, these reserves could cover nearly one month of total oil demand in IEA countries and more than 140 days of their net imports. The US and Japan together account for around 700 million barrels of public reserves.
The IEA has coordinated collective releases of emergency oil reserves five times since it was created. The most recent releases took place in 2022 after Russia’s invasion of Ukraine caused a sharp jump in global oil prices.
Energy analysts say that given the scale of the recent price surge, policymakers may again have little choice but to use these reserves to calm markets.
Meanwhile, concerns remain that the conflict in the Gulf could disrupt energy supplies further if it continues to escalate.