WASHINGTON – The Group of Seven finance ministers urged oil-producing countries on Tuesday to raise output to ensure the market is well supplied, while warning that Western nations were ready to tap strategic oil reserves to offset rising prices that could hurt global growth.
"We stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied," the G7 said in a statement. "The current rise in oil prices reflects geopolitical concerns and certain supply disruptions. We encourage oil-producing countries to increase their output to meet demand."
Oil prices have strengthened as Hurricane Isaac approached the U.S. coast and the administration of President Barack Obama said separately on Tuesday that it was still open to a possible release from the Strategic Petroleum Reserve.
"That option has been on the table for some time, and remains on the table, but we have no announcements to make today," White House spokesman Jay Carney told reporters traveling to Iowa with President Barack Obama.
Earlier this year, the White House considered tapping the reserve but held off after oil prices fell. Reuters reported this month the White House was dusting off those plans, and some energy experts viewed Isaac as a potential trigger for such a move.
Oil production in the U.S. Gulf of Mexico was down more than 90 percent on Tuesday as Hurricane Isaac headed toward the Louisiana as a Category 1 storm. The storm was expected to make landfall as early as Tuesday night.
Energy analysts do not expect extensive damage to oil and gas infrastructure if the storm stays in line with current projections.
Still, any supply disruptions could raise pressure for a release of emergency oil supplies.
"We remain vigilant of the risks to the global economy. In this context and mindful of the substantial risks posed by elevated oil prices, we are monitoring the situation in oil markets closely," the G7 said.
Finance ministers also noted that Saudi Arabia had committed at a G20 meeting of world leaders in Mexico earlier this year to use its spare oil production capacity to ensure adequate supply.
The comments from the finance ministers is a strong signal that a release may be imminent, said Jan Stuart, head of energy research at Credit Suisse in New York.
"A significant group of industrialized countries now appears to be ready to make reserves available – they know that when you make statements at this level, you also need to be ready to follow through," Stuart said.