Finance ministers from the Group of Seven developed economies are set to meet in Paris this week as the world grapples with the economic consequences of the war in Iran.
President of the Eurogroup, Kyriakos Pierrakakis, is among those travelling to the meeting and said the situation in the Middle East highlights how exposed our interconnected economies are to external shocks.
“Opening the Strait of Hormuz and bringing the conflict to a lasting end are of the utmost importance in mitigating the impact on the economy,” he said.
“The European economy has proven resilient in the face of this energy crisis.
“Yet, the global economy will feel the pressure – even if the conflict is resolved swiftly.”
He also said that macroeconomic imbalances must be viewed in a broader context.
“The EU’s agenda to deepen our capital markets and make the European economy more investible will contribute to more sustainable levels of macroeconomic imbalances,” Perrakakis said.
“However, reducing the imbalances is a shared responsibility of all major economic regions.”
Long-term borrowing costs in several G7 countries have surged in recent weeks amid investor worries about rising inflation, as the war in Iran continues to restrict energy supplies such as gas and oil.
U.S. Treasury yields spiked on Friday following a week of messy inflation data and as traders looked to price interest rate policy under new Federal Reserve Chair Kevin Warsh.
The yield on the 30-year bond jumped nearly 11 basis points to yield 5.121%, the highest since May 22, 2025, and nearing the highest since October 2023.
Similarly, in the UK, the yield on 30-year government bonds known as gilts is trading at its highest since the late 1990s due to a mix of political instability and concerns over rising inflation.
Japan has also seen bonds rise dramatically as it is particularly sensitive to inflationary pressure linked to the Iran war.
Oil prices continue to soar as well.
International benchmark Brent crude futures for July gained more than than 3% to close at $109.26 a barrel on Friday. U.S. West Texas Intermediate futures for June advanced more than 4% to settle at $105.42 per barrel.
Brent crude prices are up 74% year-to-date, but below a high of $118 a barrel reached in late April.
Higher prices for oil are likely to continue into the coming months, according to the International Energy Agency (IEA).
“Rapidly shrinking buffers amid continued disruptions may herald future price spikes ahead,” the IEA said.
