G7 'ready' to take 'all necessary measures' to tackle rise in oil prices due to West Asia crisis

Energy ministers of the G7 said on Wednesday they stood ready to take “all necessary measures” in coordination with the International Energy Agency (IEA) to tackle the rise in crude oil prices due to the Middle East war.

The statement was released as President Emmanuel Macron, whose country holds the rotating presidency of the Group of Seven advanced economies, was set to chair a video conference of G7 leaders to discuss the economic consequences of the war in the Middle East, the French presidency said.

On Tuesday, member states of the Paris-based International Energy Agency met for crisis talks to assess security of supply and the potential release of emergency stocks as the Middle East war rocked the markets.

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“In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves,” energy ministers of the G7 said in a statement on Wednesday.

They said they were coordinating within the G7, with IEA member countries and beyond.

“We agreed to stand ready to take all necessary measures in coordination with IEA Members,” the statement said. “G7 members will carefully consider the recommendations issued during these discussions.”

Separately, French Finance Minister Roland Lescure said that no decision had been taken “at this stage”.

“We need to send a very clear message, which is that if we cannot reopen the Strait of Hormuz, we will replace it with other oil that will come from elsewhere and circulate around the world,” he said in a broadcast on BFMTV/RMC on Wednesday.

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Oil reserves report

The Wall Street Journal reported Tuesday, citing officials familiar with the matter, that the IEA had proposed its largest ever release of oil reserves to counter soaring crude prices driven by the war.

The release would exceed the 182 million barrels of oil that IEA member countries released in 2022 when Russian President Vladimir Putin invaded Ukraine, the newspaper said.

The IEA did not immediately respond to a request for comment from AFP.

The crude market has been hit by wild volatility since the United States and Israel began striking Iran at the end of last month, with Tehran retaliating by attacking targets across the oil-rich Gulf and effectively shutting down the crucial Strait of Hormuz.

Macron earlier this week spoke about the possibility of G7 countries using their emergency oil reserves to counter any extreme rise in oil prices caused by the war.

G7 finance ministers met on Monday and G7 energy ministers on Tuesday to hold talks.

Asian equities extended gains Wednesday while oil stabilised after the WSJ report.

IEA member countries currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government mandates.

The Paris-based IEA was created to coordinate responses to major supply disruptions after the 1973 oil crisis.

In order to ensure energy security, the IEA imposes on its members an obligation to hold emergency oil stocks equivalent to at least 90 days of net oil imports.