G7 to discuss releasing strategic oil reserves, Macron says
French President Emmanuel Macron said Monday the G7 will discuss a possible release of strategic oil reserves, as finance ministers of the world's leading industrialised nations prepared to meet for crisis talks on the Middle East war.
Macron, whose country holds the rotating presidency of the Group of Seven advanced economies, said that "the use of strategic reserves is an option being considered."
A possible meeting of G7 heads of state and government could take place this week, Macron told journalists on his way to Cyprus.
"A coordination among G7 heads of state and government this week on the issue of energy is being examined," he added.
French Finance Minister Roland Lescure will chair a video meeting of G7 finance ministers at 1:30 pm Paris time (1230 GMT).
The gathering will "review the situation in the Gulf from an economic point of view" and the "events of recent days," the ministry said.
The Financial Times reported earlier that the finance ministers of G7, which also includes Canada, Germany, Italy, Japan, the United Kingdom and the United States, were scheduled to discuss a joint release of strategic oil reserves coordinated by the International Energy Agency (IEA).
- 'Need to coordinate' -
"We will discuss, we will listen to the feedback from the field, from businesses, from economists in these different parts of the world," Lescure had said earlier.
"We obviously need to coordinate."
Asian stock markets plunged Monday as oil prices soared 30 percent on fears about supplies from the Middle East as the US-Israeli war against Iran stretched into a second week with no sign of letting up.
The surge was pared after the Financial Times report, which said three G7 countries, including the United States, had so far backed the idea.
The Nikkei daily reported Monday that the Japanese government had instructed domestic oil reserve bases to prepare to make releases. The Japanese government said that no decision had been taken.
ALSO READ: Economist warns petrol could reach R26/litre as Middle East tensions push oil prices up
Japan's strategic oil reserves were more than 400 million barrels as of December, and are among the world's largest. Prime Minister Sanae Takaichi said on March 2 that the reserves were equivalent to 254 days of domestic consumption.
US President Donald Trump said the spike in prices was a "small price to pay" to eliminate Iran's nuclear threat, repeating the White House's insistence that the rise is temporary.
"ONLY FOOLS WOULD THINK DIFFERENTLY," he wrote on his Truth Social platform.
The 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. These stocks are either controlled directly by the state or by private companies.
France holds 118 days of stocks, the economy ministry told AFP on Monday.
- 'Temporary fix' -
Investors are concerned about Iran's blockade of the Strait of Hormuz, which separates Iran from the United Arab Emirates and is a key route for maritime trade.
Nearly 20 percent of the world's crude oil and about 20 percent of liquefied natural gas (LNG) usually transit through the key shipping lane.
Iran's Revolutionary Guards claim they have "complete control" of the strategic waterway and warned that any vessels seeking to use it risk damage from missiles or stray drones.
ALSO READ: Mojtaba Khamenei: son and successor to Iran's supreme leader
"The Strategic Petroleum Reserve release would offset around 2 to 3 weeks of normal Strait of Hormuz flows if it remains effectively closed," said Lee Hardman, a senior currency analyst at Japanese bank MUFG.
"It would be a temporary fix to help prevent an even more disruptive surge in the price of oil in the coming weeks," he said in a note to clients.
G7 will have to find common ground in the face of diverging interests.
"One reading of what is currently ongoing is that the United States wants to increase its dominance in global fossil fuel markets," said Guntram Wolff, an economist at the Bruegel think tank.
"And so that's a certain division between Europe and the United States," he added.
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