U.S. and Western allies turn to reserves to counteract Gulf oil crisis

The blockage in the Persian Gulf poses the sternest test the reserves have ever faced.

- Rebecca Feng & Joe Wallace

Crude prices traded above $100 a barrel for the first time since 2022.

(REUTERS)

After the 1973 oil shock, the U.S. and allies swore to maintain emergency stockpiles to make sure there could never be a repeat.

Finance ministers from Group of Seven economies met Monday to discuss whether to release crude to counteract the loss of Middle Eastern supplies.

“We are prepared to take all necessary measures, including drawing on strategic stock reserves, in order to stabilize the market,” French Finance Minister Roland Lescure told reporters after the meeting of the International Energy Agency, an organization of Western and allied economies that helps oversee the oil stockpiles of 32 member countries.

The meeting showed growing concern in the Trump administration and allied governments about the fast-spreading effects of the Iran war on energy markets. The Strait of Hormuz, the exit point for ships in the Persian Gulf, is effectively closed, trapping more than 1,000 vessels and forcing major Gulf oil producers to cut output.

Benchmark Brent crude futures, having rocketed at the open late Sunday, pared gains as news emerged of a possible reserve release. And prices fell further after President Trump said, “I think the war is very complete, pretty much.”

Still, prices are almost 40% higher than on the eve of the war and traded above $100 a barrel for the first time since 2022.

Traders worry that even if the waterway reopens, exports of crude, diesel and gasoline won't quickly recover to prewar levels in part because of attacks on energy infrastructure. Restarting shut wells also takes weeks or even months. Some wells never return to their original production levels.