'Oil' is not well: G7 countries, Japan weigh strategic reserve release as price hovers around $100

G7 countries will hold an emergency meeting on Monday (March 9) to address soaring oil prices after crude surged 30% to $119.48, crashed 19% to $96.45, and later settled near $103.32, a massive $23 intraday swing, one of the biggest single-day reversals in crude oil market history. The sharp volatility came as the escalating US-Israel conflict with Iran rattled global markets. Finance ministers from major industrialised economies, including UK Chancellor Rachel Reeves, are expected to discuss the economic consequences of the conflict and its impact on energy markets and inflation.

Oil prices spiked as traders feared prolonged disruptions to energy shipments through the crucial Strait of Hormuz, a narrow maritime route that normally carries about 20% of the world’s oil supply. Traffic through the strait has slowed dramatically since the conflict intensified more than a week ago. Global benchmark Brent crude briefly climbed close to $120 per barrel during Asian trading on Monday before retreating to around $107. US West Texas Intermediate (WTI) crude followed similar movements and traded near $104 per barrel.

According to a report by the Financial Times, the G7 meeting may consider a coordinated release of petroleum reserves through the International Energy Agency (IEA). If implemented, it would mark the first such intervention since 2022, when reserves were released following Russia’s invasion of Ukraine. The possibility of major supply disruptions has raised fears of higher energy costs for households and businesses worldwide. Persistent energy inflation could also limit the scope for central banks to cut interest rates.

Also Read: Mirror of power: Will Mojtaba Khamenei follow his father Ali Khamenei’s path or build a harder line for Iran?

Geopolitical tensions escalated over the weekend. The US and Israel carried out fresh airstrikes across Iran targeting several sites, including oil storage facilities. Meanwhile, Iran reportedly launched attacks on energy infrastructure in nearby Gulf states. Saudi Arabia said it intercepted two waves of drones heading toward a major oilfield overnight.

Political developments inside Iran also added to uncertainty after Mojtaba Khamenei was named successor to Supreme Leader Ali Khamenei, signalling that hardline leadership remains firmly in control during the conflict.

How global markets reacted to Israel-Iran war?

Financial markets reacted sharply. European stock markets fell after steep declines across Asia. Germany’s DAX dropped 1.6% while France’s CAC 40 fell 2%. In London, the FTSE 100 slipped 1.3%, although energy companies BP and Shell gained as oil prices surged. Asian markets saw deeper losses earlier in the day. Japan’s Nikkei 225 fell 5.2%, while South Korea’s Kospi dropped 6%, triggering a temporary circuit breaker to halt trading and prevent panic selling. Natural gas prices also surged. UK gas for month-ahead delivery jumped nearly 25% to 171p per therm at the start of trading before easing to about 156p. Despite the spike, prices remain far below the 2022 peak of 640p reached after Russia’s invasion of Ukraine.

Rising geopolitical risks have also pushed up government borrowing costs. The yield on UK two-year government bonds climbed to 4.12% from 3.87%, while the benchmark 10-year yield rose to 4.76%, up from around 4.3% before the conflict began. US President Donald Trump downplayed concerns over rising oil prices. Posting on his Truth Social platform, he said temporary price increases were a small cost for global security and predicted oil prices would fall once Iran’s nuclear threat was eliminated. However, higher fuel costs are already hitting American consumers. Data from the motorists group AAA shows the average price of regular gasoline in the US rose 11% last week to $3.32 per gallon.

Disclaimer: WION takes utmost care to accurately and responsibly report ongoing conflicts in West Asia involving Israel, Iran, US, Gulf nations and non-state actors like Hezbollah, Hamas, Houthis, Islamic State, and others. Claims and counterclaims, disinformation and misinformation are being made online and offline. Given this context, WION cannot independently verify the authenticity of all statements, social media posts, photos and videos.