Oil prices eased slightly in early Monday trading after a sharp rally, following reports that G7 nations may consider a coordinated release of strategic petroleum reserves to ease supply pressures linked to the escalating conflict with Iran. The move comes as governments attempt to stabilize energy markets after the strong surge in prices since the beginning of the military confrontation.
Brent crude was trading near 106.80 dollars per barrel, while West Texas Intermediate crude hovered around 102.79 dollars per barrel. Earlier in the session prices posted strong gains, with Brent jumping more than 30 percent to a peak of 119.50 dollars per barrel, while the US benchmark reached about 119.43 dollars. These levels were last seen in mid 2022. The rally reflects rising concerns over potential disruptions to global oil flows, particularly after military strikes targeted oil facilities inside Iran.
Reports indicate that finance ministers from G7 countries are preparing to hold an emergency meeting to discuss a coordinated release of strategic oil reserves in cooperation with the International Energy Agency. The proposal is aimed at reducing supply pressures and calming the volatility currently seen in energy markets.
The military confrontation involving the United States, Israel and Iran entered its tenth day, with continued strikes targeting Iranian energy facilities. At the same time reports suggested retaliatory attacks on oil infrastructure in several Middle Eastern countries.
Market concerns intensified further due to threats affecting navigation in the Strait of Hormuz, one of the most critical maritime routes for global energy trade. Nearly one fifth of the world’s oil consumption passes through this narrow shipping lane, making any disruption there a major risk for global supply. Since the beginning of the conflict oil prices have climbed more than 25 percent, pushing fuel costs higher across many regions.
Energy analysts warn that a prolonged disruption in the Strait of Hormuz could trigger a shock in energy markets comparable to the disruption seen during the Russia Ukraine crisis in 2022. In a scenario where oil flows resume partially under military protection Brent could remain near 100 dollars per barrel through mid year before gradually easing as supply conditions improve.
Some Middle Eastern producers including the United Arab Emirates and Kuwait have already begun adjusting production levels as storage capacity becomes strained due to supply chain disruptions in the region.
US President Donald Trump acknowledged the recent rise in oil prices, suggesting that elevated levels may persist in the near term. He described the increase as a temporary cost in light of the ongoing military escalation. Trump previously downplayed concerns about higher gasoline prices in the United States, stating that the military operation against Iran remains the primary priority.
US gasoline futures also climbed more than 10 percent, moving above three dollars per gallon and approaching levels last seen in mid 2022, reflecting the broader stress in global energy markets despite discussions about protecting shipping routes and securing maritime traffic through the Strait of Hormuz.
Stay informed about global markets through our previous analyses. and Now, you can also benefit from LDN company services via the LDN Global Markets trading platform.
