The Group of 7 nations have decided against jointly releasing hundreds of millions of barrels of crude oil reserves to stanch skyrocketing prices, which have hit over $100 a barrel in what has been described as the most severe energy crisis since the 1970s.
Following a virtual call Monday, it was revealed that the G7 finance ministers declined to release oil stockpilse, though they agreed to closely monitor the energy markets and take necessary actions needed for stabilization, Bloomberg reported.
Releasing oil reserves was reportedly recommended by the International Energy Agency, according to Japan’s finance minister.
The G7 decision came just hours after oil prices surged to record levels of more than $119 per barrel, the highest seen since 2022 and the immediate aftermath of Russia’s invasion of Ukraine.
International and domestic benchmarks settled later Monday morning on news of the G7 meeting, sticking around the $100 per barrel line. As of around 9:30 am EST, Brent Crude was up by 9.96%, selling at $101.92 per barrel. West Texas Intermediate was also up 9.47%, and was priced at $99.51 per barrel.
The price hikes have primarily been driven by the significant drop in traffic through the Strait of Hormuz, which connects the Persian Gulf and the Gulf of Oman. Roughly 20 million barrels of crude oil and other oil products pass through the strait daily, equivalent to 20% of global oil demand.
Following the U.S. and Israel’s strikes on Iran in late February, the Islamic Revolutionary Guard Corps moved to close the crucial chokepoint for global energy trade.
While a handful of tankers have been able to make it through the strait, hundreds of other vessels have been unable to pass through, as their political risk insurance premiums have skyrocketed or their coverage has been canceled entirely.
The United States has avoided tapping the U.S. Strategic Petroleum Reserve over the last week. President Donald Trump promised on his inauguration to fill the government’s reserves “right to the top.”
The SPR has a maximum capacity of around 700 million barrels, and currently only holds roughly 415 million barrels. U.S. crude reserves levels significantly declined under the Biden administration, particularly after Russia invaded Ukraine. The Biden administration sold around 180 million barrels to curb rising oil prices, and was lambasted by Republicans for tapping the reserves so heavily.
The Trump administration began to refill the SPR in October.
The soaring oil prices are placing a new political pressure on Trump, who has continuously pointed to low gas prices as a hallmark of his administration’s efforts to tackle affordability.
Crude oil is the largest component of the retail price of gasoline, accounting for around 50% of the price.
Analysts with GasBuddy are now forecasting that there is an 80% chance the national average price of gasoline could hit $4 per gallon within the next month, or even sooner. In the short term, average prices are expected to hit around $3.75–$3.95 per gallon this week.
With every one-cent increase, Americans are spending around $3.7 million more each day, GasBuddy’s Patrick De Haan has estimated, meaning Americans are spending around $139 million more a day on gasoline than one year ago.
As of Monday, the national average price of gasoline was around $3.478 per gallon, up nearly $0.50 from last week, according to data compiled by AAA.
ENERGY MARKETS FACE ‘HEART ATTACK’ AS GULF INFRASTRUCTURE TARGETED IN IRAN CONFLICT
Trump has repeatedly dismissed concerns over the price hikes at the pump, insisting that prices will come down when the war in Iran is over.
“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace,” Trump said in a post to Truth Social on Sunday. “ONLY FOOLS WOULD THINK DIFFERENTLY!”
