Energy ministers from G7 nations said they are ready to take “necessary measures” to support the global supply of energy after the United States-Israel war with Iran sent oil prices surging.
Despite this, a meeting of G7 finance ministers and the International Energy Agency (IEA) ended without an agreement to release strategic crude reserves.
This comes as oil prices reached nearly US$120 per barrel on Monday (Tuesday AEDT) amid fears of a prolonged supply disruption, before falling sharply after President Trump raised hopes the war would soon end.
“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 G7 and with international partners,” the G7 said in a statement.
“We stand ready to take necessary measures, including to support global supply of energy such as stockpile release.”
Brent Crude futures surged as much as 29% at one stage on Monday before sharply paring gains after the G7 said it would discuss a possible stockpile.
Brent Crude pared its early surge to 7.8% to US$99.88 a barrel at 1.09 pm in New York.
Sources say discussions have been positive, and any action towards releasing reserves would occur after the energy ministers’ meeting.
Sources told CNBC that the U.S. believes the release of 300 million to 400 million barrels, representing 25% to 30% of the 1.2 billion barrels in the reserve, would be appropriate.
The closure of the Strait of Hormuz has caused the biggest oil supply disruption in history, according to analysts from consulting firm Rapidan.
About 20% of the world’s oil consumption is exported through the Strait.
Unlike past shocks, there is no spare capacity to address the disruption because Saudi Arabia and the United Arab Emirates are cut off from the global oil market due to the strait’s closure, Rapidan analysts said.
The U.S. Strategic Petroleum Reserve is not sufficient to offset the supply bottled into the Persian Gulf, the analysts said. The U.S. reserve currently has 415 million barrels, about 58% of its total authorised capacity of 714 million barrels, according to the Department of Energy.
