G7 Finance Ministers Meet as Hormuz Closure Threatens Global Economy
CNBC reported Sunday that G7 finance ministers and central bank governors are convening in Paris Monday and Tuesday. The gathering comes as the ongoing conflict disrupting the Strait of Hormuz pushes long-term borrowing costs and oil prices sharply higher across major economies.
Eurogroup Warns of Lasting Economic Damage
Eurogroup President and Greek Finance Minister Kyriakos Pierrakakis issued a pointed warning ahead of the summit. He said reopening the Strait of Hormuz and ending the regional conflict are critically important for limiting economic fallout. Pierrakakis acknowledged European resilience so far. But he cautioned that the global economy faces mounting pressure even if hostilities conclude quickly. The Eurogroup represents euro-area finance ministers and holds an observer seat at the G7 table.
Bond Markets Flash Warning Signs Across G7
Sovereign debt markets in multiple G7 nations are under visible stress. In the United States, the 30-year Treasury yield jumped nearly 11 basis points on Friday, reaching 5.121%. That marks the highest level since May 2025. Traders are pricing in inflation risk while also assessing interest rate policy under new Fed Chair Kevin Warsh. UK 30-year gilt yields hit levels not seen since the late 1990s. Japan, a heavy energy importer, has also seen yields climb sharply in recent days. Yields rise when confidence in government debt falls.
Oil Prices Surge as Inventories Shrink
The Strait of Hormuz crisis has delivered a severe supply shock to global energy markets. Brent crude closed Friday above $109 a barrel, up more than 3% on the day. US West Texas Intermediate settled above $105 per barrel after a gain exceeding 4%. Brent is now up 74% year-to-date, though it remains below the late-April peak near $118. Global oil inventories are drawing down at a record pace to offset disrupted Middle Eastern supply. The International Energy Agency warned last week that rapidly shrinking stockpiles could trigger further price spikes ahead of peak summer demand.
Background: Why the Strait of Hormuz Matters
The Strait of Hormuz is the world’s most critical oil and gas chokepoint. Roughly 20% of global petroleum liquids pass through it daily. Any prolonged closure forces buyers to seek alternative supplies or draw on strategic reserves. The current disruption stems from the Iran conflict, which has throttled flows and sparked inflation fears globally. Central banks across the G7 are now navigating a difficult balance between fighting price pressure and avoiding overtightening into slowing growth.
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