G7 energy and finance ministers said on Monday that they are closely monitoring how the war in Iran is affecting energy and commodity markets, inflation, as well as overall economic stability, and are prepared to take “any necessary measures” to ensure the security and stability of energy markets, according to a statement released Monday.
“We stand ready to take all necessary measures in close coordination with our partners, including to preserve the stability and security of the energy market. We recognise the importance of coordinated international action to mitigate spill overs and safeguard macroeconomic stability”, the statement reads.
Although G7 leaders have not agreed on any concrete step—such as a new release of oil reserves—today’s discussions will pave the way for an assessment by European energy ministers on Tuesday.
Ministers will review energy security and supply levels across the EU as the bloc scrambles to contain an oil crisis that, according to Fatih Birol, chief of the International Energy Agency is reminiscent of the 1970s.
The IEA has already coordinated the release of 400 million barrels of oil on 11 March to mitigate the shortfall caused by the Hormuz blockage, following the US and Israeli attacks against Iran, but it proved insufficient to address soaring oil prices. EU technical experts in oil and gas have been meeting regularly to assess the severity of the situation.
The European Commission maintains that the bloc is mostly facing price volatility. But Tuesday’s meeting with energy ministers is aimed at taking stock of current reserves amid growing unpredictability, as LNG tankers en route to Europe have been diverted to Asia amid higher prices.
The sudden decline in oil and natural gas prices sent shockwaves through markets, raising Brent crude oil to $119 per barrel, up from around $70 before the war. Analysts say oil prices could jump to $200 amid unpredictable scenarios from the conflict.
As for natural gas, analysts forecast prices could jump to 2022 energy crisis levels, when the bloc abruptly lost 44% to 45% of its imports from Russia, following Moscow’s invasion of Ukraine. The virtual meeting came one day before EU energy ministers are due to discuss supply security.
G7 countries are increasing the number of urgent meetings amid efforts to tackle the global economic consequences of the war in Iran, which has just entered its second month.
Signs of inflationary pressure and soaring borrowing costs are now making the looming crisis hard to ignore for the G7. With oil and gas prices already spiralling, there is now fear that a protracted conflict could upend global supply chains as key commodities, including fertilisers, are trapped in the Strait of Hormuz, the critical waterway which has been effectively closed since the conflict broke out.
US President Donald Trump announced on Monday that there is “great progress” in the negotiations with Tehran. However, he threatened an attack on Iranian power plants, oil infrastructure, and potentially desalination plants if a deal is not “shortly reached” — actions that could further exacerbate speculation in global markets.
In the meantime, the group of Seven agreed to secure the Strait but only after the war between the United States, Israel and Iran ends.
On Monday, European Commissioner for Energy Dan Jørgensen called for targeted measures that should align with a long-term strategy, including reducing fossil fuel imports, boosting renewable energy production, and establishing an energy union, he said on X.
Jørgensen said the bloc “must double down on our path to energy independence” by upgrading its grid infrastructure — a key element to optimise renewable power flows and avoid grid congestion and curtailment.
The Danish Commissioner urged MEPs on March 25 to back a “swift and ambitious agreement (Grids Package)”, to speed up infrastructure-building and interconnections “desperately needed”.
In the meantime, some European countries have already begun adopting national measures to tackle the crisis.
Poland will introduce a fuel price cap as of Tuesday, Energy Minister Miłosz Motyka announced on Monday. This follows similar moves by Hungary and Croatia, which introduced their price caps in early March.
Mared Gwyn Jones contributed to the reporting
