The escalation of the Iran war and the resulting disruption to shipping through the Strait of Hormuz sent oil prices sharply higher on Monday, pushing crude above $100 a barrel for the first time since 2022 and fuelling fears of a wider energy shock. Oil surged by more than 25 per cent at one stage in Asian trade before easing somewhat later in the session.
In response to the market turmoil, G7 finance ministers were due to discuss a possible co-ordinated release of emergency oil reserves, in a move that would be organised with the International Energy Agency. The Financial Times reported that three G7 countries, including the United States, had already expressed support for the idea. Reuters separately confirmed, citing a French government source, that such talks were scheduled for Monday.
According to the Financial Times report, the United States was backing the release of between 300 million and 400 million barrels from strategic reserves, equivalent to roughly a quarter to a third of the total held by participating countries. The proposal would amount to one of the largest emergency interventions in the oil market in recent years.
Such co-ordinated reserve releases are rare. The governments have only resorted to similar action on a handful of occasions, including after the first Gulf War, Hurricane Katrina, the Libyan supply disruption, and in response to the market shock that followed Russia’s invasion of Ukraine.
The announcement of possible G7 action helped pull prices back from their highs, but the market remained under heavy pressure. Reuters reported that Brent had earlier climbed to just under $120 a barrel before retreating, while investors continued to price in the risk of prolonged disruption across the Gulf.
Iran’s role in the global oil market explains the scale of the reaction. Goldman Sachs estimates that Iran produced around 3.5 million barrels per day of crude oil in 2025, together with about 0.8 million barrels per day of condensate, amounting to roughly 4 per cent of global oil supply. The bank said Iranian exports averaged 1.7 million barrels per day of crude and condensates in 2025, underlining the consequences of any sustained interruption.
The closure or effective blocking of the Strait of Hormuz is central to the present crisis. The passage is one of the world’s most important maritime energy routes, and any threat to traffic through it has immediate consequences for prices, insurance costs and supply expectations. Goldman Sachs said around 20 per cent of global LNG production and a very large share of Gulf oil flows remain exposed to Hormuz-related disruption.
Asian equity markets reacted with sharp losses. Reuters reported that investors sold across the region as higher energy costs and geopolitical uncertainty weighed on sentiment. The wider market decline was linked directly to concerns that a prolonged Middle East conflict would feed inflation, slow growth and unsettle global trade flows.
The broader concern for policymakers is that an oil spike of this kind would not remain confined to energy markets. Higher crude prices would quickly feed through to transport, manufacturing and consumer prices, creating renewed inflationary pressure at a time when several major economies are already facing weak growth and fragile investor confidence. Governments are therefore seeking not only to add supply, but also to signal that they are prepared to act collectively to prevent a deeper shock.
For the moment, markets remain highly sensitive to developments in the Gulf. The combination of war in Iran, disrupted shipping through Hormuz and the prospect of emergency reserve releases has created a volatile environment in which prices can swing sharply on both military and political signals. The outcome of the G7 discussions is likely to shape the next phase of market reaction.
