Finance ministers from the Group of Seven (G7) economies are meeting in Paris today amid growing concern over the prolonged closure of the Strait of Hormuz, a key global shipping route for oil and gas exports.
The ongoing conflict involving Iran has significantly disrupted energy supplies passing through the strategic waterway, triggering fears of a wider economic shock across global markets.
The summit brings together finance leaders from the United States, the United Kingdom, Canada, France, Germany, Italy and Japan, all under increasing pressure to coordinate a response to the worsening energy crisis.
The Strait of Hormuz is one of the world’s most important energy corridors, handling nearly a fifth of global petroleum supplies. Continued disruption there has raised alarm among governments, investors and international agencies over the fragility of the global economy.
Eurogroup President and Greek Finance Minister Kyriakos Pierrakakis, who is representing euro area ministers at the summit, warned ahead of the meeting that the conflict has exposed how vulnerable the interconnected global economy remains to geopolitical shocks.
“Opening the Strait of Hormuz and bringing the conflict to a lasting end are of the utmost importance in mitigating the impact on the economy,” Pierrakakis said in a statement.
Energy Crisis Raises Global Concerns
Although European markets have so far shown signs of resilience, officials say a prolonged blockade could trigger far-reaching consequences for supply chains, inflation and global growth.
Pierrakakis noted that while Europe has managed the crisis relatively well so far, the effects of continued disruption would eventually be felt worldwide.
“The European economy has proven resilient in the face of this energy crisis. Yet, the global economy will feel the pressure — even if the conflict is resolved swiftly,” he stated.
Bond Markets React to Inflation Fears
Financial markets are already responding sharply to the uncertainty surrounding global energy supplies.
Long-term government bond yields across several G7 economies have risen significantly in recent weeks as investors react to fears of renewed inflation and tighter monetary policy.
In the United States, Treasury yields climbed sharply on Friday following fresh inflation concerns and uncertainty surrounding interest rate policy under new Federal Reserve Chair Kevin Warsh. The yield on the 30-year U.S. Treasury bond rose nearly 11 basis points to 5.121 per cent, its highest level since May 2025.
In the United Kingdom, 30-year government bond yields have reached levels not seen since the late 1990s amid political uncertainty and concerns over rising inflation.
Japan, heavily dependent on imported energy, has also seen a sharp rise in bond yields as markets react to the impact of higher oil prices linked to the Middle East conflict.
Oil Prices Continue to Climb
Global oil prices remain elevated as fears over supply shortages intensify.
Brent crude futures rose more than three per cent on Friday to close at $109.26 per barrel, while U.S. West Texas Intermediate crude climbed over four per cent to settle at $105.42 per barrel.
Although prices remain below the $118 per barrel peak recorded in April, crude oil has already surged by roughly 74 per cent since the beginning of the year.
Global Oil Supplies Under Pressure
Analysts warn that global oil inventories are shrinking rapidly as countries attempt to offset supply disruptions caused by the blockade.
The International Energy Agency (IEA) cautioned in its latest monthly report that oil and fuel prices could rise even further ahead of peak summer demand if the Strait of Hormuz remains closed.
“Rapidly shrinking buffers amid continued disruption may herald future price spikes ahead,” the agency warned.
Africa Feeling the Economic Strain
The effects of the crisis are also beginning to hit African economies, particularly countries heavily dependent on imported fuel.
In Ghana, rising fuel costs are already starting to affect inflation after months of relative stability. Annual inflation increased to 3.4 per cent in April as global oil prices filtered into the domestic market.
Transport operators in Accra and other parts of the country are warning of possible fare increases as fuel prices continue to rise. Economists say higher transport costs could quickly affect food prices and other essential services, putting additional pressure on households.
The energy crisis is also influencing monetary policy decisions across Africa.
While Ghana recently reduced its policy rate to support economic activity, central banks in countries such as South Africa, Angola and Kenya have paused interest rate cuts in an effort to protect their currencies from rising oil import costs.
Financial analysts also warn that a prolonged closure of the Strait of Hormuz could increase debt risks for vulnerable African economies already struggling with high borrowing costs and limited fiscal space.
As the Paris summit begins, G7 leaders face mounting pressure to calm markets and prevent further economic instability. However, much will depend on how quickly diplomatic efforts can restore stability in the Middle East and reopen one of the world’s most critical energy routes.