G7 Set for Emergency Talks as Oil Prices Surge and Global Markets Tumble Amid Iran Conflict

Finance ministers from the Group of Seven (G7) nations are scheduled to hold an urgent meeting on Monday to address the dramatic rise in global oil prices following intensified hostilities between the US, Israel, and Iran.

The escalation began over the weekend when multiple airstrikes targeted Iranian oil facilities, raising fears of a sustained disruption to energy exports through the strategic Strait of Hormuz. Brent crude briefly surged above $119 a barrel on Monday before easing to around $107, while US West Texas Intermediate (WTI) crude traded near $104.

UK Chancellor of the Exchequer, Rachel Reeves, is among the G7 officials expected to discuss coordinated measures, including a potential joint release of petroleum reserves through the International Energy Agency (IEA). If implemented, this would mark the first collective release of emergency oil stocks since 2022, when nations responded to Russia’s invasion of Ukraine.

“The question everyone is asking themselves is, what is the duration of this conflict?” said Paul Gooden, head of natural resources at NinetyOne Asset Management. He warned that oil prices could reach levels that force “demand destruction,” potentially between $120 and $150 per barrel, though he added that such spikes would likely be temporary.

Market jitters have spilled over into equities and government borrowing costs. London’s FTSE 100 fell 1.3%, while European indices also slumped, with Germany’s DAX down 1.6% and France’s CAC 40 declining 2%. In Asia, Japan’s Nikkei 225 dropped 5.2%, and South Korea’s Kospi fell 6%, briefly triggering a 20-minute trading halt.

The conflict has also impacted natural gas prices. UK month-ahead gas contracts rose almost 25% to 171p per therm before settling around 156p, doubling prices from before the outbreak of hostilities.

The situation in Iran remains tense. On Sunday, the country named Mojtaba Khamenei as successor to Supreme Leader Ali Khamenei, signaling the continued dominance of hardliners. Meanwhile, the US and Israel conducted airstrikes targeting multiple Iranian energy sites, and Iran responded with attacks on energy infrastructure in neighboring Gulf states. Saudi Arabia intercepted and destroyed two waves of drones heading for a major oilfield.

Energy experts warn that the disruption of roughly a fifth of the world’s oil supply through the Strait of Hormuz could prolong global energy market volatility, contributing to inflationary pressure and influencing central banks’ monetary policies.

In the United States, President Donald Trump downplayed the economic impact of rising oil prices, asserting that any short-term increase is “a very small price to pay for U.S.A., and World, Safety and Peace,” while his Energy Secretary clarified that Israeli forces, not the US, were conducting strikes on Iranian infrastructure. Average US gasoline prices have already risen 11% over the past week to $3.32 a gallon.

Analysts from the Peterson Institute for International Economics caution that the conflict’s duration remains uncertain, with ongoing disruptions likely to keep markets on edge.