Just now! Breaking news from the G7! Iran: The end of the war will be decided by Iran! Major news from the Persian Gulf!

Oil prices may still be volatile!

According to foreign media reports, a G7 official stated on Monday (the 9th) that G7 finance ministers reached a consensus during an emergency meeting: to temporarily hold back from releasing strategic oil reserves.

Meanwhile, a spokesperson for Iran’s Islamic Revolutionary Guard Corps issued a statement: Trump is attempting to exert psychological pressure on Iran through lies and deception, “but Iran is resisting American and Israeli aggression with courage and firm will,” “the end of the war will be decided by Iran.”

Additionally, as tensions in the Middle East escalate, global shipping companies and insurers are becoming increasingly cautious about routes passing through the Strait of Hormuz. Beyond the risks of war and missile attacks, industry experts highlight another overlooked but equally serious issue—if oil tankers sink in the Persian Gulf, it could trigger an environmental disaster that is difficult to bear.

Latest G7 Decision

On Monday, G7 finance ministers held a phone call to discuss how to respond to the surge in international oil prices caused by the US and Israel’s actions against Iran. The G7 includes the United States, Canada, Japan, Italy, the United Kingdom, Germany, and France.

In a statement, G7 said it is prepared to take necessary measures to support global energy supply, including releasing oil reserves, but no decision has been made yet. An official familiar with the discussions said there was a general consensus among participants. It’s not that anyone opposed, but it’s a matter of timing, and more analysis is needed.

The official revealed that G7 energy ministers will hold a phone call on the same issue on Tuesday, and G7 leaders will discuss it later this week. “I believe the final decision will be made by the leaders of each country,” the official said.

Strategic oil reserves are usually coordinated for release by the International Energy Agency (IEA). IEA Director Birol stated that the situation in the Strait of Hormuz poses a significant and growing risk to the oil market. Historically, the IEA has coordinated the release of strategic reserves only five times, two of which occurred during the Russia-Ukraine conflict. Previously, reserves were also used during Libya’s supply disruptions, the First Gulf War, and Hurricane Katrina in 2005.

Double Concerns

Since the outbreak of the US-Israel-Iran conflict, the biggest worries in financial markets are: how high will oil prices go, and how long will they stay elevated? If oil prices remain high for a long time, ordinary households already troubled by high inflation will be under even greater pressure. Meanwhile, corporate costs will also rise significantly, including fuel, transportation of goods, and energy costs for data centers.

Last night, after Trump signaled an end to the war, market expectations shifted. But whether this truly means an end remains to be seen.

First, Iran has stated that the end of the war will be decided by Iran itself. An IRGC spokesperson said Trump is trying to exert psychological pressure on Iran through lies and deception, “but Iran is resisting US and Israeli aggression with courage and firm will,” “the end of the war will be decided by Iran.” In the event of attacks on Iran, Tehran will not allow “the enemy and its allies” to export oil from the region.

Furthermore, although a ceasefire is anticipated, the situation in the Strait of Hormuz remains unresolved. Insurance brokers and shipping companies warn that if a large oil tanker sinks in the Persian Gulf, causing a massive oil spill, the entire coast from Kuwait to Qatar could be contaminated. This region has developed into a wealthy area with skyscrapers, luxury resorts, and thriving commercial centers, actively promoting tourism. Compared to the late 1980s, when Iran and Iraq fought a tanker war, the region’s economy was still heavily dependent on oil trade. Today, urbanization and tourism development mean that a major pollution incident would cause even more difficult-to-estimate economic losses.

Foreign media reports that the region currently lacks a mature oil spill cleanup industry and technological system like that of the US. In the event of a large-scale oil spill, response capacity and infrastructure may be insufficient. More troubling is that the global insurance market currently lacks enough data to assess such a significant environmental risk. If crude oil leaks and pollutes beaches, halting tourism, the operational losses would be hard to quantify, making it difficult for insurers to price such scenarios.

Maritime insurance typically covers hull, machinery, and cargo, and also includes pollution liability. However, industry insiders note that while hull, machinery, and cargo insurance remain available after missile attacks and rising conflict, premiums have skyrocketed. According to data from major global insurance brokers Marsh McLennan and Howden Group, premiums have increased 4 to 6 times compared to the previous week.

Without pollution risk coverage, insurers see this as an “unassessable or uninsurable” risk. Market analysts compare this to the terrorism insurance issues faced by the US after the September 11 attacks in 2001. At that time, the government introduced the Terrorism Risk Insurance Act (TRIA) to back insurers against potentially huge terrorist attack losses. Without a similar government support mechanism to shoulder environmental pollution risks, uncertainty in shipping and insurance markets will persist and could further hinder commercial shipping activities in the Persian Gulf region.

(Article source: Securities Times)