G7 foreign ministers said Saturday they are prepared to take “necessary measures” to protect global energy supplies as the war-driven threat to shipping lanes and oil infrastructure keeps getting worse.
The message came from ministers representing Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, alongside EU foreign policy chief Kaja Kallas, who all pointed to the International Energy Agency’s March 11 stockpile release as one example of the kind of response it is ready to support.
The ministers said, “We reaffirm the importance of safeguarding maritime routes, and safety of navigation … as well as the safety and security of supply chains and the stability of energy markets.”
They also condemned Iranian strikes on energy sites in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Jordan, and Iraq, calling for their “immediate and unconditional cessation.” The statement added that countries hit by those attacks have the right to defend themselves.
G7 also repeated its position that Tehran must never get a nuclear weapon, must stop its ballistic missile program, and must “end its destabilizing activities in the region and around the globe.”
Saudi officials brace for oil above $180 if the war keeps choking supply
Inside Saudi Arabia, officials are running urgent price scenarios as the war keeps disrupting energy flows across the Gulf. Their base case is rough. Several officials now see oil climbing past $180 a barrel if the disruption lasts until late April.
That kind of jump would bring in more revenue, but it also brings risk. Saudi officials are worried that a surge that sharp could push buyers to cut oil use for longer, not just for a few weeks. They are also worried that a recession could crush demand and leave the market damaged after the fighting ends.
Umer Karim, an analyst at the King Faisal Center for Research and Islamic Studies, said Saudi Arabia does not want oil to rise too fast because that creates long-term instability.
Umer said the kingdom would rather see a more moderate increase while keeping its market share steady. Saudi Aramco, which handles the country’s production, sales, and pricing, declined to comment.
The latest military strikes have already lifted prices. After an Israeli strike Wednesday on Iran’s South Pars gas field, Tehran responded by hitting facilities at Qatar’s Ras Laffan energy hub. Iran also attacked other Gulf energy infrastructure, including Saudi facilities at Yanbu, the Red Sea end of a pipeline that can carry crude around the chokepoint at the Strait of Hormuz.
At the same time, Iran kept targeting ships in the Gulf. Those attacks have nearly shut the strait, which handles about 20% of the world’s oil shipments. Brent futures climbed as high as $119 a barrel before easing back Thursday. The all-time Brent high remains $146.08, reached in July 2008.
Traders build bigger bets as Aramco works toward its April 2 pricing call
The war has already knocked millions of barrels out of global supply. Since the conflict began on Feb. 28, prices have risen by about 50%. That jump is now feeding straight into Saudi pricing decisions.
Some Saudi customers no longer want to use Brent as the benchmark because of the wild swings. Still, officials said Aramco insists Brent still gives a real picture of supply conditions in the market.
Aramco’s modelers now have to judge where prices are heading before the company releases its official crude selling prices on April 2. They are using several inputs, including direct feedback on customer demand from staff who handle oil sales.
Saudi light crude is already being sold to Asian buyers through the kingdom’s Red Sea port for about $125 a barrel. Officials said extra oil in storage, including barrels moved out of the Gulf before the war, is being used up.
Once that cushion thins further, physical shortages are expected to bite harder next week, with prices seen nearing $138 to $140 a barrel.
After that, the numbers get even harsher. Saudi officials said that by the second week of April, if supply disruption does not ease and the Strait of Hormuz stays closed, oil could hit $150, then $165, and then $180 in the weeks that follow.
Traders are placing bets on a further surge too, though many are still below Aramco’s darkest view. Intercontinental Exchange data showed that options tied to Brent reaching $130, $140, or $150 a barrel next month were among the most popular positions on Wednesday. A smaller but growing group of traders is also betting the price could rise even higher.
Source: https://www.cryptopolitan.com/g7-says-it-is-now-ready-to-act/
