G7 weighs emergency oil release as Middle East war triggers historic 25% price surge

G7 finance ministers are set to convene for discussions regarding a coordinated release of petroleum from emergency stockpiles, an initiative managed by the International Energy Agency (IEA).

Citing informed sources, the Financial Times reported that three G7 nations—including the US—have signaled their support for the measure. The ministers are scheduled to hold a teleconference with IEA Executive Director Fatih Birol to evaluate the escalating impact of the conflict involving Iran.

The diplomatic maneuvering follows a historic surge in oil prices on Monday, which climbed more than 25% to reach their highest levels since mid-2022. The market remains dominated by anxieties over protracted maritime disruptions as major producers curtail output and the war between Iran and a US-Israeli alliance broadens in scope.

Brent crude futures rose by $24.96, or 27%, to $117.65 per barrel by 04:51 GMT, placing the global benchmark on track for its most significant single-day percentage gain in history. Concurrently, US West Texas Intermediate (WTI) crude futures advanced by $25.72, or 28.3%, to trade at $116.62.

In earlier Monday trading, WTI spiked as much as 31.4% to $119.48 per barrel, while Brent peaked at $119.50, representing a 29% increase. These gains build upon a volatile previous week during which Brent surged 27% and WTI jumped 35.6%.

The supply crunch has been exacerbated as Iraq and Kuwait began throttling production in response to hostilities obstructing shipments from the Middle East. Industry sources stated Sunday that output at Iraq’s primary southern oil fields has plummeted by 70%, falling to just 1.3 million barrels per day, as the conflict has rendered exports via the Strait of Hormuz impossible.

An official from the state-run Basra Oil Company confirmed that domestic crude storage capacity has reached its maximum threshold. Similarly, the Kuwait Petroleum Corporation initiated production cuts on Saturday and declared force majeure on shipments, though the company has yet to disclose the full scale of the suspension.

These developments follow prior reductions in liquefied natural gas (LNG) output by Qatar. Market analysts project that the United Arab Emirates and Saudi Arabia may soon be forced to follow suit as their own storage facilities approach total exhaustion.

According to Reuters, another catalyst driving the price rally is the appointment of Mojtaba Khamenei as Iran’s new leader. Coming just one week after the start of active hostilities with the US and Israel, the succession underscores that hardline elements maintain a firm grip on power in Tehran.

“With the appointment of the late leader’s son as the new head of Iran, US President Donald Trump’s objective of regime change has become significantly more challenging,” said Satoru Yoshida, a commodities analyst at Rakuten Securities. Yoshida projected that WTI could reach $120 per barrel in the near term, with a subsequent trajectory toward $130.