G7 Discusses Volatility in Global Oil Prices and Middle East Conflict
G7 leaders will hold an online meeting on Wednesday, 11 February to discuss the Middle East situation following US-Israel attacks on Iran, alongside the possibility of coordinated strategic oil reserve releases to stabilise global markets.
The meeting comes one day after the International Energy Agency (IEA) reportedly proposed the largest oil reserve release in history at an emergency meeting. This would constitute the first collective IEA-led response since 2022, when Russia launched a full-scale invasion of Ukraine.
Japan, which depends on the Middle East for over 90 per cent of its crude oil imports, is expected to call for diplomatic efforts to ease tensions, according to government sources. Prime Minister Sanae Takaichi announced that Japan will begin releasing oil reserves as early as Monday without waiting for a collective decision under the IEA.
Japan plans to release oil reserves equivalent to 15 days of consumption held by the private sector and reserves equivalent to one month of consumption held by the government. As of the end of December, Japan held oil reserves sufficient for 254 days of domestic consumption, comprising 146 days held by the government, 101 days by the private sector, and the remainder stored jointly with oil-producing nations.
Following reports that Iran has begun laying mines in the Strait of Hormuz—one of the world’s most critical energy corridors through which approximately one-fifth of global oil consumption passes—G7 leaders are expected to reaffirm close cooperation. The G7 members are working to ensure crude oil supplies remain stable after the Strait of Hormuz was effectively closed following the commencement of US-Israel attacks on Iran in late February.
On Tuesday, the G7 nations—the United Kingdom, Canada, France, Germany, Italy, Japan, and the United States, together with the European Union—held an online meeting of energy ministers. They reaffirmed their readiness to take necessary measures, including strategic reserve releases, to support global energy supplies.
According to the Wall Street Journal, citing officials familiar with the matter, the IEA previously proposed “the largest oil reserve release in its history” to dampen price surges. The IEA noted that the largest coordinated strategic oil reserve release previously occurred in 2022 when member nations committed to releasing approximately 182 million barrels of emergency reserves in two phases.
IEA member nations, including G7 countries, currently hold over 1.2 billion barrels of public emergency oil reserves. Meanwhile, the United States and Japan hold combined reserves of approximately 700 million barrels. IEA members are required to maintain oil reserves equivalent to at least 90 days of net imports and are prepared to respond collectively to serious supply disruptions affecting global oil markets.
Energy expert Yayan Satyakti from Padjadjaran University assesses that global oil prices still have the potential to surge to as high as US$130 per barrel. Global oil prices are estimated to have further upside potential reaching US$130 per barrel if the conflict between Iran and the United States-Israel escalates further. President Donald Trump has threatened “high-level” military consequences should Iran proceed with laying mines in the Strait of Hormuz.
The Thai government has announced a series of energy-saving measures for government agencies and state-owned enterprises in response to surging global oil prices. Previously, there were attacks on Iranian banking facilities. According to Mehr News Agency, air strikes targeted an Iranian bank in Tehran.
Minister Gus Irfan affirmed that Umrah pilgrims in Mecca and Medina remain safe despite rising Middle East tensions. He also stressed that Iran has no intention of becoming involved in conflict with nations in the region.
Member of Commission VII of the Indonesian House of Representatives from the Golkar Party Gandung Pardiman has urged the government to anticipate escalation of geopolitical conflict in the Middle East.
The government is preparing several scenarios for conducting the Hajj pilgrimage this year amid heightened tensions in the Middle East region to ensure the safety of Indonesian pilgrims.