People walk near farmland by the Zubair oil field as gas flares rise in the distance, in Basra, Iraq, on Monday.Essam Al-Sudani/Reuters
Global action to release strategic oil reserves could come as soon as Tuesday, when G7 energy ministers meet to discuss how to bolster supplies and calm energy markets that have surged to near four-year highs since U.S. and Israeli forces began bombing Iran.
Meanwhile, U.S. President Donald Trump on Monday sent mixed signals about the duration of the conflict, saying it would end “very soon” and make oil supplies “dramatically more secure” in the long run. Moments later, he hinted that more aggressive military action would come should Iran persist in blocking oil tanker traffic through the Strait of Hormuz.
Finance ministers from the Group of Seven industrialized countries held an emergency meeting Monday to discuss the potential of intervening in the market, as their economies face new inflationary pressure from the sharp runup in oil prices.
“We stand ready to take necessary measures, including to support global supply of energy such as stockpile release,” the finance ministers said in a joint communique after the meeting.
U.S. officials believe a joint release of 300 million to 400 million barrels would be appropriate, the Financial Times reported, quoting unnamed people close to the talks. Such volumes could be the largest ever, possibly topping the 300 million barrels that the U.S. and International Energy Agency (IEA) members released in 2022 after Russia’s invasion of Ukraine.
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The price of Brent crude, the international benchmark, reached almost US$120 a barrel Monday after a weekend of military escalation. But the commodity fell sharply as traders reacted to the prospect of emergency crude supplies flowing into the market. By the end of the trading day, Brent closed up 7 per cent at US$98.96, and West Texas Intermediate up 4.3 per cent at US$94.77. After Mr. Trump’s comments, both sank into the red in after-hours trade.
Also on Monday, U.S. Energy Secretary Chris Wright said the country is considering co-ordinating sales of oil from its Strategic Petroleum Reserve with releases from other nations. He said as well that the U.S. has “some other options” on allowing more sales of Russian oil held in tankers on the water in Asia. Late last week, for instance, Washington issued a 30-day waiver allowing the sale of Russian crude currently stranded at sea to continue to India.
Mr. Trump said the U.S. wants to bring oil prices down after their “artificial inflation” off the back of the conflict. The war has essentially closed a key shipping route for Persian Gulf oil, choking off about a fifth of the world’s supplies to make it the largest-ever disruption.
IEA member countries hold more than 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.
Canada is closely monitoring the situation and is co-ordinating with allies through the G7 and the IEA, said Charlotte Power, spokesperson for federal Energy and Natural Resources Minister Tim Hodgson. (Mr. Hodgson will be part of Tuesday’s G7 meeting.)
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Canada is an IEA member, but as one of the world’s top producers and a net exporter, it is not obligated keep strategic stockpiles. Refiners and marketers keep buffer supplies on hand in case of emergencies or plant outages, however.
Those could be used to supply the domestic market if necessary, and the country can adjust energy transport through marine and rail shipments if supply routes are interrupted, Ms. Power said.
Unlike previous conflicts in the Middle East, the market was awash in surplus supplies before bombardments began. Inventories rose to more than 8.2 billion barrels in 2025, their highest level since 2021, according to the IEA.
“These stocks now provide a welcome cushion against supply disruptions,” it noted in an analysis in the wake of the conflict, “however, prolonged supply disruptions could flip the market into a deficit.”
That possibility has cast more urgency on discussions around global oil supplies as the war intensifies.
Fearing strikes by Iran, oil and liquefied natural gas tankers have stopped sailing through the Strait of Hormuz, the key waterway for exports by Persian Gulf oil producers. With the narrow strait effectively blocked, producers, including Kuwait and the United Arab Emirates, have begun cutting output as their storage facilities fill up.
Mr. Trump has said the U.S. is offering political risk insurance to tankers operating in the gulf.
The questions bedevilling markets are: how long will the conflict last, and how badly will oil and gas infrastructure be damaged?
Iran’s naming on Sunday of Mojtaba Khamenei, the son of the slain Iranian supreme leader Ali Khamenei, as his father’s successor is seen as an act of defiance against Mr. Trump, who described Mojtaba as a “lightweight.”
Research house Rystad Energy said Brent crude could hit US$135 a barrel – approaching the record of US$147.50 set in 2008 – if the war drags on for four months. Under that scenario, oil could then ease back to US$85 as markets begin to normalize. If the conflict lasts for two months, with ship traffic resuming gradually by the end of March, it said, crude could sell for US$100 by April, then fall back to US$70 by year end.
“Between the potential for massive Strategic Petroleum Reserve releases and the eventual response from U.S. shale, the world is searching for a stabilizer to absorb this shock,” Janiv Shah, Rystad’s vice-president, oil markets, said in a statement.
“With refineries already curtailing throughput as a defensive measure, the focus has shifted entirely from profit margins to national energy security, making current oil prices a very tangible threat to global stability.”
David Oxley, chief commodities economist with London-based Capital Economics, said although shipping will eventually get back to precrisis levels, the market may develop a “new normal.” That includes potentially more volatility and sporadic attacks against vessels and energy infrastructure, leading to a higher risk premium being baked into prices, he said.
While oil production facilities were not overly vulnerable during prior conflicts, given they are spread out and relatively hard to hit, the “advent of drone warfare is changing things,” he said.
With reports from Eric Reguly in Rome and Reuters