PARIS: Eurogroup President Kyriakos Pierrakakis has said the situation in the Middle East underscores the vulnerability of the interconnected global economy to external shocks, ahead of a meeting of Group of Seven finance ministers.
“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,” Eurogroup President said in a statement.
Pierrakakis, who also serves as Greece’s finance minister, is representing the euro area at the G7 gathering. The G7 core members are the U.S., U.K., Canada, France, Germany, Italy and Japan.
“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,” Pierrakakis said.
Long-term borrowing costs in several G7 economies have surged in recent weeks as investors worry about rising inflation driven by tight energy supplies while the Iran war chokes oil and gas shipments through the Strait of Hormuz.
Bond yields and prices move in opposite directions. Traders often demand higher yields on debt when confidence in the issuing government weakens.
Oil prices remained elevated. International benchmark Brent crude futures for July rose more than 3% to close at $109.26 a barrel Friday. U.S. West Texas Intermediate futures for May advanced more than 4% to settle at $105.42 a barrel.
Brent prices are up 74% year-to-date but below a late April high of $118 a barrel.
Global oil inventories are falling at a record pace to offset the supply disruption in the Middle East and will approach critical levels if the strait does not reopen.
