Group of Seven finance ministers said they were ready to take any steps needed to support global energy supply, including releasing strategic oil reserves — although the group isn’t at the point of doing so yet.
“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 G-7 and with international partners,” the group said in a statement. “We stand ready to take necessary measures, including to support global supply of energy such as stockpile release.”
G-7 finance ministers held a virtual meeting on Monday to discuss the conflict in the Middle East, its impact for regional stability, global economic conditions, and financial markets, and the importance of secure trading routes. France, which holds the presidency, said the group was wasn’t yet at the point of organizing a release.
Brent oil futures surged as much as 29% at one stage on Monday before sharply paring their gains when it emerged that the G-7 would discuss a possible stockpile release.
The heads of the International Monetary Fund, World Bank Group, Organisation for Economic Co-operation and Development, and International Energy Agency took part in the discussion.
Roland Lescure, the finance minister of France said the group was “not there yet” in terms of a release, but that it was, in conjunction with the IEA, monitoring the situation closely.
The war has led to producing giants including Saudi Arabia, Kuwait, Iraq and the United Arab Emirates lowering their output and the effective closure of the Strait of Hormuz, the oil market’s most-important trade artery.
Developments over the past few days “convinced us to send very clear and firm messages and I hope very effective to reassure everyone,” Lescure said, adding that there is “no problem of supply of oil or gas in the US or Europe.”
Stock releases are normally coordinated by the IEA. After the meeting, the organization’s chief Fatih Birol said that the situation at Hormuz presents “significant and growing” risks to the oil market. On Friday, he emphasized how well supplied it was.
Coordinated releases of strategic stockpiles have been carried out only five times before, including twice in response to Russia’s invasion of Ukraine in 2022. Before that, reserves were tapped following supply disruptions in Libya, Hurricane Katrina, and during the first Gulf War.
Consumers across the world are already feeling the impact of the disruptions in the Middle East, with long queues forming at filling stations, and a surge in jet-fuel prices pushing up the cost of air tickets.
The current situation is among the most severe disruptions in the history of the oil market because 20% of the world’s oil and a similar portion of liquefied natural gas can’t pass through Hormuz.
Joaquim Miranda Sarmento, Portugal’s finance minister, cautioned it’s important to keep reserves for situations of low supply, “which is not the situation we are currently in.”
“We don’t have an oil supply problem at the moment,” he said. “The problem we have is with the price of oil markets.”