In a bid to address the alarming surge in oil prices triggered by ongoing conflicts in the Gulf, G7 finance ministers are convening for an emergency meeting on Monday. This meeting, coordinated by the International Energy Agency (IEA), will discuss the possibility of a joint release of petroleum from strategic reserves. The call, which will include IEA executive director Fatih Birol, is scheduled for 8:30 AM New York time and seeks to mitigate the severe economic impacts originating from the region’s instability.
So far, three G7 nations, including the United States, have expressed their support for this collaborative approach. According to insiders, U.S. officials are considering a substantial release ranging from 300 million to 400 million barrels, which would account for 25% to 30% of the 1.2 billion barrels in the IEA’s strategic reserve. This meeting comes as President Donald Trump faces intense scrutiny over skyrocketing oil prices, which have surged since the onset of conflict. The average petrol price in the U.S. has jumped to $3.45 a gallon, up from $2.98 the previous week, prompting calls for action to reverse this troubling trend.
The rise in oil prices has not only raised concerns domestically but is also poised to have significant global repercussions. Countries such as China, India, South Korea, Japan, Germany, Italy, and Spain, heavy importers of crude oil, are particularly vulnerable to these price fluctuations, which could lead to an inflationary crisis that hampers global economic growth. On Monday, Brent crude oil—a global benchmark—spiked by 24% during Asian trading, reaching $116.71 a barrel, before settling at approximately $110.85, while West Texas Intermediate saw an initial rise of 28% before pulling back to around $108.
The IEA’s reserve system was established in the aftermath of the 1974 Arab oil embargo to help major oil-consuming nations respond to drastic energy shocks. Historically, there have been five collective releases by IEA member states since the agency’s inception, with the last two occurring in 2022 in reaction to Russia’s military actions in Ukraine.
A confidential document prepared for the IEA’s recent emergency meeting confirmed that IEA nations collectively hold over 1.24 billion barrels in public stocks and around 600 million barrels in industry reserves, potentially sufficient to cover nearly one month of oil demand across member countries. Both the U.S. and Japan contribute significantly to these stocks, holding about 700 million barrels of the total.
The continuing oil price ascent poses a direct threat to Trump’s agenda of curbing inflation and lowering energy costs, with mounting criticism from within his party over his focus on international matters rather than domestic economic issues. On Sunday, Trump took to social media to downplay concerns regarding rising oil prices, asserting that they would drop quickly once the “Iran nuclear threat” is neutralized.
In response to the rising oil prices, stock markets across Asia experienced significant declines, and U.S. equity markets were anticipated to follow suit, adding to the stress within financial systems. The administration’s decision to contemplate tapping into strategic petroleum reserves marks a remarkable shift from its previous stance that no such measures were necessary.
Energy analysts suggest that the unprecedented rise in oil prices has left policymakers with little alternative but to utilize strategic reserves to stabilize markets. Qatar’s energy minister previously cautioned that the ongoing conflict could cripple global economies, even predicting that Gulf energy exporters might halt production imminently. As pressure mounts on IEA members to release strategic stocks, it’s worth noting that China, while not a full IEA member, has built substantial reserves, estimated between 1.1 billion and 1.4 billion barrels, enough to sustain its domestic oil import demands for approximately 140 days.
