Leaking Before the Meeting? G7: Generally Supports Use of Strategic Oil Reserves
The Group of Seven (G7) has sent a significant signal just hours before a crucial summit, stating its general support for tapping into strategic petroleum reserves to address energy market turbulence triggered by the Iran conflict.
According to Bloomberg, G7 energy ministers issued an email statement on Wednesday, saying they would work closely with the International Energy Agency (IEA), closely monitor energy market trends, and coordinate internally within the G7 as well as with international partners, IEA member states, and other countries.
The G7 energy ministers added that they generally support "taking proactive measures in response to this situation, including drawing down strategic reserves."
Notably, French President Emmanuel Macron, who currently holds the rotating presidency of the G7, will convene a video summit of G7 leaders at 22:00 Beijing time on Wednesday. The meeting will focus on the Iran crisis and the sharp rise in energy prices.
The key topics of this video call include the "energy situation" and the Strait of Hormuz, with a clear indication that "this will not merely be a verbal intervention." If the G7 leaders announce substantive measures after the meeting, tonight could mark the third consecutive day of major price swings in oil markets.
Energy Ministers' Meeting: Support in Principle, No Final Decision Yet
On Tuesday, G7 energy ministers held a video conference with the International Energy Agency (IEA) to discuss the impact of the Iran conflict on energy markets and supply chains. In a joint statement released on Wednesday, they said, "We are closely monitoring energy market dynamics and strengthening coordination both within the G7 and among international partners, IEA member states, and other countries."
The statement also welcomed the IEA Council’s meeting held that day, describing it as a "critical opportunity" for member states to assess current supply security and market conditions.
However, according to Reuters, energy ministers did not reach consensus during their Tuesday meeting on releasing strategic oil reserves. Instead, they requested that the IEA conduct an assessment of the current situation before any action is taken. The use of the phrase "generally support" in this statement indicates that specific action plans remain pending final approval at the leaders’ summit level.
Oil Prices Volatile This Week, Markets Highly Sensitive
Oil prices have already undergone two rounds of dramatic fluctuations this week, making markets extremely sensitive to any policy signals. On Monday, benchmark oil prices surged to near a four-year high; on Tuesday, following former U.S. President Trump's prediction that Middle East hostilities might end soon, prices plummeted by 11%; later that evening, a tweet from the U.S. Energy Secretary—later deemed an "error"—claimed that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz, sending oil prices plunging again by up to 20%.
Against this backdrop, the outcome of the G7 leaders’ summit is closely watched by markets. If substantive reserve releases are announced afterward, oil prices will face direct downward pressure; if the outcome remains limited to verbal statements, market reaction may be relatively muted.