G7 Pledges Measures to Stabilize Energy Markets Amid Iran War

The Group of Seven (G7) economic powers have pledged to take all necessary measures to stabilize energy markets disrupted by the ongoing war in Iran. Finance leaders from the G7—comprising the US, Canada, Japan, Britain, France, Germany, and Italy—held a teleconference on Monday to coordinate actions aimed at safeguarding energy market stability and limiting broader economic spillovers.

According to TimesLIVE and Al Jazeera, the G7 emphasized their readiness to take all necessary measures in close coordination with partners. The International Energy Agency (IEA) members agreed earlier this month to release a record 400 million barrels of oil from strategic stockpiles to combat rising global crude prices. This move is seen as a significant step to manage the supply crunch caused by the conflict.

The G7 statement also called on countries to refrain from imposing unjustified export restrictions on oil, gas, and related products. Japanese Finance Minister Satsuki Katayama highlighted the increased likelihood of oil price rises affecting markets and economic growth, stressing that the situation cannot be allowed to drag on. The G7 central banks reaffirmed their commitment to maintaining price stability, with monetary policy based on data.

Japan has taken a proactive stance by calling for further flexible measures if the Iran war continues. Industry Minister Ryosei Akazawa noted the acute impact of soaring energy prices and supply concerns in Asia, which are disrupting global supply chains. The G7's coordinated efforts aim to ensure stable energy supplies and mitigate the economic impact of the conflict.

The heads of the International Energy Agency (IEA), International Monetary Fund (IMF), and World Bank announced on Wednesday that they will form a coordination group to maximize their response to the significant economic and energy impacts of the war in the Middle East. In a joint statement, these global bodies noted that the war had caused major disruptions in the region and triggered one of the largest supply shortages in global energy market history.

The new coordination group will assess the severity of impacts across countries, coordinate a response mechanism, and mobilize stakeholders to deliver support to countries in need. The response could include targeted policy advice, assessment of potential financing needs, financial support through low or zero-percent financing, and unspecified risk mitigation tools. Thousands of people have been killed across the Middle East since the war began on February 28.

The conflict has spread across the region, disrupting energy supplies and threatening to send the global economy into a tailspin. The impact is substantial, global, and highly asymmetric, disproportionately affecting energy importers, particularly low-income countries. The war has resulted in higher oil, gas, fertilizer prices, concerns about food prices, and affected global supply chains of helium, phosphate, aluminum, and other commodities.

Ministers from the G7 will hold talks on Monday to unpack the economic consequences of the war in the Middle East as oil and gas prices continue to soar. French Finance Minister Roland Lescure said the G7 meeting would include energy and finance ministers as well as central bank chiefs and heads of other international agencies.

The International Monetary Foundation (IMF) warned that “all roads lead to higher prices and slower growth worldwide” if the war continues to choke oil, gas, and fertilizer supplies. The IMF noted that the UK and Italy are particularly exposed due to their reliance on gas-fired power. Additionally, the EU is considering reviving energy-crisis measures used at the start of the Ukraine war, including grid tariffs and taxes on electricity.