The ripple effect of the ongoing Middle East conflict is now spreading across industries. Tens of thousands of Indian export containers remain stranded, and exporters are facing sharply higher freight costs, including war-risk surcharges of up to $5,000 per container. Meanwhile, with crude oil prices surging to 2022 highs, global equity markets have been under severe selling pressure. Seeing the global disruption of oil and other supplies, the Group of Seven (G7) finance ministers may discuss a joint release from emergency oil reserves. This is as per Financial Times.
G7 to discuss emergency reserve release
According to FT, three G7 countries, including the US, have so far expressed support for the idea, the FT said, citing sources. The FT report added that the ministers and IEA Executive Director Fatih Birol will hold a call to discuss the impact of the Iran war.
G7 countries include seven world’s advanced economies, Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
The report comes as oil prices crossed $115, surging more than 25% on Monday to their highest levels since mid-2022.
Oil hovers near $110 after spike to $115
Oil prices hovering near $110 after reaching $115, is specially a concern for India which is the world’s third-largest oil importer. It imports more than 80% of its crude oil requirements
The surge in prices was a direct consequence of fears of prolonged supply disruption intensified in the Middle East due to the conflict involving Iran, the United States and Israel.
Producers such as Iraq and Kuwait have started cutting output, while Qatar has reduced liquefied natural gas shipments as the conflict disrupts exports from the region.
Government steps in to avoid LPG shortage
The Indian government has already invoked emergency powers and asked refiners to maximise LPG production to avoid a cooking gas shortage after supply disruptions in the Middle East.
Indian companies also raised LPG prices for the first time in nearly a year on Friday, tracking higher global benchmarks.
Shares of Indian oil marketing companies also fell sharply on Monday after crude oil prices surged.
Indian refiners under pressure
Share price of oil PSUs declined during Monday’s trading session. Indian Oil Corporation (IOC) fell 4.30%, while Hindustan Petroleum Corporation slipped 5.05%. Bharat Petroleum Corporation dropped 6.12%, marking its steepest fall since June 2024.
The fall in oil marketing companies dragged the Nifty Oil & Gas Index down 2.37%, while the broader Nifty 50 index declined 1.26%. The oil and gas index has already dropped 6.2% since the US-Israeli strike on Iran last week.