G7 finance ministers will hold an emergency meeting on Monday to discuss a potential coordinated release of oil reserves through the International Energy Agency (IEA) in response to surging oil prices following the Gulf conflict. According to informed sources, including a senior G7 official, the ministers and IEA Executive Director Fatih Birol will hold a teleconference at 8:30 AM New York time (8:30 PM Beijing time) to discuss the impact of the Iran war. Three G7 nations, including the United States, have reportedly expressed support for the idea so far.

The 32 member countries of the IEA all hold strategic reserves as part of a collective emergency system designed to address oil price crises. One source indicated that some U.S. officials believe a coordinated release of approximately 300 to 400 million barrels of oil would be appropriate, representing 25% to 30% of the IEA members' total strategic reserve of 1.2 billion barrels.

This meeting comes as the U.S. President faces pressure to curb the sharp rise in crude oil prices since the outbreak of the war. As of last Sunday, the U.S. average gasoline price had increased to $3.45 per gallon from $2.98 a week earlier, with further increases expected unless the trend is reversed.

The oil price surge over the past week has sent shockwaves through the global economy, potentially triggering a spike in inflation that could cause lasting damage to global economic growth. China, India, South Korea, Japan, Germany, Italy, and Spain, as the largest crude oil importers, are particularly vulnerable to price shocks.

During Asian trading hours on Monday, the international benchmark Brent crude oil price surged by as much as 24% to $116.71 per barrel. The U.S. benchmark WTI crude oil price skyrocketed by 30% intraday, approaching $120 per barrel.

The establishment of emergency petroleum reserves was part of the measures taken when the IEA was founded in 1974, following the Arab oil embargo that caused crude prices to spike and led to significant fuel shortages across the Western world. These reserves are intended to enable major oil-consuming nations to cope with significant energy shocks.

Since its formation, IEA member countries have conducted five collective releases. The two most recent occurred in 2022 in response to oil price spikes following the outbreak of the Russia-Ukraine conflict.

Last Tuesday, the IEA held an emergency meeting to consider various options for addressing the emerging oil supply crisis. A document prepared for the meeting stated that the IEA is "prepared to take action to support the stability of the oil market." The confidential document noted that IEA countries hold over 1.24 billion barrels of public stocks, in addition to approximately 600 million barrels of industry stocks, which could provide additional supply to the market if needed.

These inventories could meet the total oil demand of IEA countries for nearly one month and cover more than 140 days of net imports. Of the total 1.24 billion barrels in inventory, the United States and Japan account for about 700 million barrels.

The soaring oil prices threaten the U.S. President's commitment to reducing inflation and energy costs. He has faced criticism from some Republicans for spending too much time on foreign affairs instead of addressing domestic cost-of-living issues. On Sunday evening, the President appeared dismissive of any concerns about the oil price surge on Truth Social.

"When the Iranian nuclear threat is destroyed, oil prices will fall rapidly," he wrote, adding, "The short-term oil price is a very small price to pay for the safety and peace of America and the world. Only a fool would think otherwise!"

Affected by the oil price surge, most Asian stock markets fell sharply on Monday. According to futures indices, U.S. stocks were also likely to decline significantly on Monday, potentially increasing pressure on financial markets.

The decision to consider using strategic petroleum reserves marks a shift in the administration's policy. Last week, the administration had stated that using reserves to stabilize the market was unnecessary. However, energy analysts said the record-breaking oil price increases over the past week have left policymakers with little choice but to release strategic inventories in an attempt to calm the markets.

In an interview with the Financial Times on Friday, Qatar's Energy Minister Saad al-Kaabi warned that the war could "cripple the world economy" and predicted that Gulf energy exporters would halt production within days. A report from Rapidan Energy Group on Sunday warned that IEA member countries would "face immense pressure to release strategic stocks."

Following news of the potential G7 coordinated oil reserve release, international oil prices pared gains on Monday afternoon. The WTI crude price increase narrowed from 30% to less than 15%, while Brent crude was up 14%.