Oil prices tempered early gains on Monday after a report said the G7 countries will discuss a possible joint release of emergency reserves to offset supply disruptions from the Iran conflict.
Brent traded at $106.80 a barrel by 02:03 ET (06:03 GMT), while West Texas Intermediate crude futures traded at $102.79 a barrel.
Brent oil futures for May surged over 30% to a peak of $119.50 a barrel, while West Texas Intermediate crude futures jumped as much as 30% to an intraday high of of $119.43 a barrel earlier in the day. Both contracts were at highs last seen in mid-2022.
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G7 to discuss joint release of emergency reserves as Iran conflict worsens The Financial Times reported on Monday G7 finance ministers will discuss jointly releasing their emergency petroleum reserves in an emergency meeting on Monday.
The release will be in co-ordination with the International Energy Agency, with three G7 countries, including the U.S., having expressed support for the idea, the FT report said.
Separately, Bloomberg reported that Saudi Arabian producers were offering oil on spot markets, a rare move by the country as it moves to fill a potential void in crude supplies.
The U.S.-Israel war with Iran escalated over the weekend after air strikes hit Iran’s oil facilities for the first time since the conflict began in early-March. The conflict entered its tenth consecutive day on Monday.
Iran was seen retaliating by launching attacks on oil infrastructure in surrounding Middle Eastern countries.
Iran also began attacking ships passing through the Strait of Hormuz, a key shipping lane for roughly 20% of the world’s oil consumption. Disruptions in the lane had been a key source of concern for oil markets, with the channel now effectively blocked.
Oil prices have soared more than 25% since the onset of the war, causing sharp increases in fuel prices across the globe.
"Tail risks from a sustained Hormuz stoppage remain in play, shifting the potential energy shock closer in scale to the 2022 Russia‐Ukraine episode," OCBC analysts wrote in a note.
"In a moderately severe scenario – partial flows resuming under military escort – Brent could stay near USD100/bbl through mid‐year before cooling toward a well‐supplied 2026 equilibrium."
Major middle eastern producers, such as the United Arab Emirates and Kuwait, have begun reducing oil production, as storage runs out due to widespread supply disruptions.
Trump flags high oil prices in short term; gas prices hit near 4-yr high U.S. President Donald Trump acknowledged the jump in oil prices on Sunday evening, indicating that oil prices were likely to remain high in the near-term.
"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 social media post.
Trump had last week downplayed concerns over rising U.S. gas prices due to the Iran conflict, telling Reuters that the military operation against Tehran was his main priority.
U.S. gasoline futures surged over 10% on Monday, hitting levels well above $3.0 a gallon and also nearing highs last seen in mid-2022.
Oil was little soothed by Trump last week promising maritime insurance and potential navy protection for ships passing through the Strait of Hormuz.
