G7 countries to discuss joint release of oil reserves

The finance ministers of the G7 countries will discuss the possible joint release of oil from their strategic reserves, coordinated by the International Energy Agency (IEA). This will take place at an emergency meeting on Monday aimed at curbing the sharp rise in oil prices following the conflict in the Persian Gulf, the Financial Times reports.

Ministers and IEA Executive Director Fatih Birol will hold talks at 8:30 a.m. New York time to discuss the impact of the war with Iran, according to sources familiar with the situation, including a senior G7 official.

Three G7 countries, including the US, have so far expressed support for the idea, the same sources said.

The 32 members of the IEA maintain strategic reserves as part of a collective emergency system designed for oil price crises.
One of the sources said that some US officials believe that a joint release of between 300 and 400 million barrels – 25 to 30% of the total 1.2 billion barrels in the reserve – would be appropriate.

The meeting comes amid pressure on US President Donald Trump to halt the sharp rise in crude oil prices since the start of the war. The average price of gasoline in the US reached $3.45 per gallon on Sunday, up from $2.98 a week earlier, and is expected to continue to rise if Trump fails to reverse the trend.

The rise in oil prices over the past week has had global repercussions, threatening new inflationary pressures that could cause lasting damage to economic growth around the world. China, India, South Korea, Japan, Germany, Italy, and Spain are among the largest importers of crude oil, making them highly vulnerable to price shocks.

Brent crude, the international benchmark, jumped 24% during Asian trading on Monday to $116.71 per barrel, but later retreated and the increase narrowed to nearly 19% at $110.85 after news of the G7 meeting.

US light crude oil (WTI) – the US benchmark – rose 28% to $116.45 before returning to around $108, which also represents an increase of nearly 19%.

The emergency oil reserves were created as part of the founding of the IEA in 1974 after the Arab oil embargo, which led to a sharp rise in crude prices and a serious fuel shortage in the Western world.

These reserves are intended to allow major oil consumers to respond to serious energy shocks. Since the organization's inception, IEA member countries have carried out five collective releases of reserves. The last two were in 2022 to counter the surge in oil prices following Russia's invasion of Ukraine.

On Tuesday, the IEA held an emergency meeting to discuss options for dealing with a growing crisis in oil supplies. A document prepared for the meeting states that the agency is "ready to act to support the stability of oil markets."

The confidential document notes that IEA countries have over 1.24 billion barrels of government reserves, as well as about 600 million barrels of industry reserves, which could provide additional supply to the market if necessary.

According to the document, these reserves could cover almost a month of total oil demand in IEA countries and over 140 days of net imports. The US and Japan hold about 700 million barrels of the total 1.24 billion barrels.

The surge in oil prices threatens to undermine Trump's promise to reduce inflation and lower energy costs. He has already been criticized by some Republicans for focusing too much on foreign policy rather than domestic issues related to the cost of living.
In a post on Truth Social on Sunday evening, Trump dismissed concerns about rising oil prices.

Short-term oil prices, which will fall rapidly once the destruction of the Iranian nuclear threat is complete, are a very small price to pay for the safety and peace of the US and the world," he wrote, adding: "ONLY FOOLS WOULD THINK OTHERWISE!"
Stock markets across much of Asia fell on Monday in response to the surge in oil prices. According to futures indices, US stock markets are also bracing for heavy losses on Monday, which risks heightening tensions in financial markets.

The decision to consider using strategic oil reserves represents a reversal of the Trump administration's position, which last week said that releasing quantities from reserves would not be necessary to stabilize markets.

However, energy analysts point out that last week's record oil price surge has left policymakers with little choice but to release strategic reserves in an attempt to calm the markets.

In an interview with the FT on Friday, Qatar's energy minister Saad al-Kaabi warned that the war could "destroy economies around the world" and predicted that Gulf energy exporters could halt production within days.

In an analysis on Sunday, Rapidan Energy Group warned that IEA member countries would be "under intense pressure to release strategic reserves."

China, which is not a full member of the IEA, also has huge oil reserves accumulated over the past 12 months. Analysts estimate that Beijing has between 1.1 and 1.4 billion barrels of oil, which could potentially cover about 140 days of domestic demand for imported oil.