G7 ministers to discuss joint release of emergency oil reserves
G7 finance ministers are set to discuss a possible joint release of petroleum from reserves coordinated by the International Energy Agency in an emergency meeting on Monday, as they look to tackle surging oil prices amid the conflict in the Gulf.
Ministers will hold a call with International Energy Agency’s (IEA) executive director Faith Birol at 8:30am New York time (1:30pm GMT), to discuss the impact of the Iran war, according to people familiar with the situation – including a senior G7 official.
Three G7 countries, including the US, have so far expressed support for the idea, according to people familiar with the reports, the Financial Times reported.
The 32 member countries of the IEA hold strategic reserves as part of a collective emergency system designed for oil price crises, allowing big oil-consuming countries to respond to significant energy shocks.
The emergency petroleum stockpiles were set up as part of the creation of the IEA in 1974, following the Arab oil embargo, which shot up crude oil prices and triggered major fuel shortages in the West.
One person said that some US officials believe a joint release of 300m-400m barrels, which equals roughly 25 to 30 per cent of the 1.2bn barrels in the reserve, would be appropriate.
Pressure piles on Trump
The emergency meeting comes as US President Donald Trump faces increasing pressure to stop the steep rise in the crude oil price since the start of the war.
The average US petrol price rose to $3.45 (£2.45) a gallon by Sunday, from $2.98 a gallon a week ago.
The price is expected to climb further unless Trump can get a handle on prices and reverse the trend.
Surging oil prices over the past week have triggered global fallout, threatening an inflationary surge that has the potential to do lasting damage to economic growth across the world.
China, India, South Korea, Japan, Germany, Italy and Spain are among the biggest importers of crude, leaving them starkly exposed to price shocks.
News of the meeting sent Brent crude, the international benchmark, tumbling 14.4 per cent in early Monday trading to $99.85 a barrel, after earlier hitting $116.7 a barrel.
The US marker, West Texas Intermediate, is hovering at $102.45, up 12.7 per cent.
Asian stock markets bore the brunt of the surge, which sent them tumbling during Monday trading.
The Kospi fell 5.96 per cent to 5,251.8 points, while Japan’s Nikkei 225 dropped 5.2 per cent to 52,728.7 points, nearing its weakest level in two months.
US equity markets are also poised for considerable losses on Monday, according to future indices.
Chris Beauchamp, chief market analyst at IG, said: “Stock markets have raced to catch up to all the news, but we are now looking at a vastly increased chance of a US and global recession as inflation surges.
“While a coordinated release of oil reserves provides temporary relief, it is a limited response, and is dwarfed by the loss of oil output from the Hormuz closure and the shutdown of production in the region.”
Tackling the crisis
Last Tuesday, the IEA held an emergency meeting to consider options to tackle an emerging oil supply crisis, with a document prepared for the meeting saying the IEA stood “ready to act to support the stability of oil markets”.
The confidential document noted that IEA countries held more than 1.24bn barrels of public stocks in addition to another 600m or so barrels of industry stocks that could bring additional supply if required.
The spike in oil prices risks threatening Trump’s promise to reduce inflation and bring down energy costs, with the president already facing criticism from some Republicans for spending too much time on foreign affairs rather than domestic cost-of-living concerns.
Republican voters have also become disillusioned by Trump’s focus on foreign matters rather than his ‘America first’ mandate which helped secure his election victory in November 2024.
Trump shrugged off concerns, writing on Truth Social on Sunday: “Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A, and World, Safety and Peace.
“ONLY FOOLS WOULD THINK DIFFERENTLY!”
However, the US’s support for a potential petroleum tap, sparks a major U-turn for the Trump administration, which said last week that releases from the stockpile would not be necessary to stabilise markets.