G7 Emergency Meeting Called as Oil Prices Pass $100 a Barrel
The G7 nations finance ministers are holding an emergency call on Monday to tackle the economic fallout from the escalating US-Israeli war with Iran, as oil prices rocket past $100 a barrel for the first time since Russia's invasion of Ukraine in 2022.
Brent crude shot up more than 25% to nearly $120 a barrel during overnight trading before pulling back to around $107. US West Texas Intermediate followed a similar path, last trading around $102–$104. WTI had already surged roughly 35% last week in its biggest weekly gain in futures trading history dating back to 1983.
The G7 meeting, which includes UK Chancellor Rachel Reeves, is expected to consider a coordinated release of petroleum from strategic reserves, organised through the International Energy Agency. Three G7 members, including the US, have already signalled support for the idea, according to the Financial Times, which first reported the talks.
If reserves are released, it would be the first time they have done so since the early days of Russia's invasion of Ukraine. The IEA said on Monday that it was "closely monitoring energy security" but did not comment further on the discussions.
Shutdown of Strait of Hormuz drives prices
The price spike stems from a near-total shutdown of traffic through the Strait of Hormuz, the narrow waterway through which about a fifth of the world's oil normally flows. Tankers are avoiding it amid fears of Iranian attacks, which has left Gulf producers with nowhere to store output, forcing cuts across the region.
Kuwait has announced precautionary reductions to production and refinery output due to "Iranian threats against safe passage of ships through the Strait of Hormuz." Iraq's output from its three main southern oilfields has collapsed by 70% to 1.3 million barrels per day, down from 4.3 million before the war began. The UAE said it is "carefully managing offshore production levels to address storage requirements."
Global markets have also taken a hit. Japan's Nikkei dropped 5.2%, South Korea's Kospi fell 6% with trading briefly halted by a circuit breaker to prevent panic selling, and European indexes opened down roughly 2.5%. London's FTSE 100 fell 1.5%, with nearly every share declining except oil majors BP and Shell. UK gas prices surged nearly 25% to 171p a therm at Monday's open before easing to around 156p.
US and Israel strike Iranian oil depots
Over the weekend, the US and Israel launched fresh airstrikes hitting oil depots inside Iran, while Iran struck back at energy infrastructure in the neighbouring Gulf states. Saudi Arabia said it intercepted and destroyed two waves of drones aimed at a major oilfield. Iran has also named Mojtaba Khamenei, son of the late Supreme Leader Ali Khamenei, who was killed in the opening days of the war, as his father's successor.
Energy Secretary Chris Wright said Sunday that Strait traffic would resume once Iran's ability to threaten tankers was neutralised. "We're not too long away before you'll see more regular resumption of ship traffic through the Straits of Hormuz," he told CNN, adding: "Worst case that's a few weeks, that's not months."
President Trump, meanwhile, has brushed off concerns about prices at the pump. After oil blew past $100 Sunday evening, he posted on Truth Social: "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!" US petrol prices rose 11% last week to a national average of $3.32 a gallon, according to motoring group AAA.
