Global emergency oil reserves could be opened up

Finance ministers from the G7 nations held a conference call with the executive director of the International Energy Agency, or IEA, on Monday, to discuss the possibility of a release of petrol reserves in the face of the current Gulf crisis and its impact on global oil prices.

The ministers were due to speak to IEA chief Fatih Birol around 8:30 am New York time, and the Financial Times reported that three of the seven group members, including the United States, backed the idea of releasing reserves.

The IEA, which comprises 32 member countries, set up an emergency oil reserve stock when it was founded in 1974.

Major global economies including China, Germany and India are significant importers of crude oil, making them vulnerable to the sudden price shocks that are being experienced at the moment.

The current crisis has already seen the average price for a gallon of petrol in the United States rise, as of Sunday, from $2.98 a week ago to $3.45, with no indication of how this might be brought under control or reversed. The FT quoted an unnamed US source as suggesting that as much as 30 percent of the reserve stock might be released to deal with the current situation.

The Strait of Hormuz, through which around one-fifth of global oil and gas seaborne transportation goes, has been effectively shut for a week, and that early trading for the week had seen the benchmark Brent crude oil price rise by 29 percent to $119.50 a barrel, the first time it had broken the symbolically significant $100 barrier since the outbreak of the Ukraine conflict four years ago.

Chris Beauchamp, chief market analyst at London-based trading company IG, told the FT a release of reserve stock would be a "temporary relief … dwarfed by the loss of oil output from the Hormuz closure". The crisis, he added, "vastly increased" the prospects of a global recession.

Adnan Mazarei from the Washington-based Peterson Institute for International Economics told the BBC that "people are realizing that (the crisis) won't end quickly", and that the US government's aims and objectives at the start of the crisis are "becoming more unrealistic."

Asia-Pacific economies are taking urgent steps, from capping domestic fuel price hikes to suspending petroleum product exports, to ensure energy security.

South Korean President Lee Jae-myung urged authorities to introduce a cap on domestic fuel prices, called for the expansion of the 100 ?trillion won ($66.9 billion) market stabilization program.

Japanese Prime Minister Sanae Takaichi said that the government is mulling steps to cushion the local economy from rising oil prices.

Thailand, which has suspended its exports of petroleum products, mandated an increase in oil traders' reserve obligations from 1 to 3 percent.

Prime Sarmiento in Hong Kong contributed to this story.