Paris (France) (AFP) – France will host a video meeting of G7 finance ministers on the Middle East crisis on Monday, as the war fuels fears for the global economy. The French finance ministry said in a statement that the meeting at 1:30 pm (1230 GMT) would “review the situation in the Gulf from an economic point of view” and “events of recent days”.
French finance minister Roland Lescure earlier told Franceinfo radio he had agreed with US Treasury Secretary Scott Bessent and other G7 finance ministers to hold the meeting over a week after the start of the US-Israel war against Iran. The idea, he said, was “to see how the conflict develops, how the markets evolve”. Finance ministers and the central bank governors of the member countries would attend, he added. France holds the rotating presidency of the Group of Seven advanced economies, which also includes Canada, Germany, Italy, Japan, the United Kingdom, and the United States. A first meeting of finance ministers under the French presidency was held on January 27.
Lescure said next week’s meeting was expected to be an exchange of views. “We’re going to listen to what is coming up from the ground, from businesses, from economists in these different parts of the world,” he added. “The idea is to be able to discuss the state of the situation so that we can assess any responses that might be needed, if we have to act.” In a conflict that is currently a local conflict in one region but has global repercussions, it is obviously essential that we coordinate.
The war sparked by the US-Israeli bombing of Iran launched on February 28 triggered a spike in crude oil and natural gas prices and a sharp fall in stock markets, particularly in Europe and Asia. The talks will address the question of Iran’s blockade of the Strait of Hormuz, which separates Iran from the United Arab Emirates and is a key route for maritime trade. Nearly 20 percent of the world’s crude oil and about 20 percent of liquefied natural gas (LNG) usually transit through the key shipping lane. Investors are concerned about a sharp rise in oil and gas prices caused by disruptions to supplies. They fear a resurgence of inflation, similar to the rise in prices triggered by Russia’s full-scale invasion of Ukraine in 2022.
Iran’s Revolutionary Guards claim they have “complete control” of the strategic waterway and warned that any vessels seeking to use it risk damage from missiles or stray drones. But US President Donald Trump has said the US Navy was ready to escort tankers through the key shipping route.
On Friday, the price of a barrel of West Texas Intermediate (WTI), the US reference, had jumped by more than 35.63 percent in a week to $90.90. But on Sunday, the US oil benchmark soared above $100 a barrel as trading opened. WTI jumped 20 percent to around $109 a barrel, a level not seen since Russia launched its invasion of Ukraine in February 2022. A barrel of Brent Crude, the international reference, was sitting around $110. The price of gas has also shot up around 40 percent over the past week.
Frederik Ducrozet, chief economist at asset manager Pictet, said the G7 finance ministers and central bankers would likely issue a statement after the meeting to calm markets. The meeting will also be an opportunity for G7 nations to find common ground in the face of diverging interests. “One reading of what is currently ongoing is that the United States wants to increase its dominance in global fossil fuel markets,” said Guntram Wolff, an economist at the Bruegel think tank. “And so that’s a certain division between Europe and the United States,” he added.
© 2024 AFP
