With growth weakening in key economies and tensions over Iran worrying major oil importers, finance ministers of the powerful group also hinted they were ready to push for the release of strategic oil reserves to prevent a tightening of the market.
“The current rise in oil prices reflects geopolitical concerns and certain supply disruptions,” the G7 finance ministers said in a statement.
“We encourage oil-producing countries to increase their output to meet demand, while drawing prudently on excess capacity. “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,” according to statement, which was released by the US Treasury.
The statement applauded Saudi Arabia's commitment, made at the Group of 20 summit in Los Cabos, Mexico, in June, to mobilise spare capacity when necessary to ensure supplies to the market are adequate.
But it also suggested the leading industrial democracies were ready to tap into global strategic oil reserves to keep price pressure down.
“We stand ready to call upon the International Energy Agency (IEA) to take appropriate action to ensure that the market is fully and timely supplied,” the statement said. “We remain committed to well-functioning and transparent energy markets.”
The statement came four days after the Petroleum Economist magazine reported that the IEA, which represents oil-consuming nations, was reluctantly backing the idea of a release of strategic oil stockpiles by major importers in September.
The IEA came behind the idea after Washington signalled it would move alone on a release
“The loss of supplies from sanctions-hit Iran will be used to justify the move,” the magazine said.
It added that the move could involve as much or more than last year's release of 60 million barrels from stockpiles.
Sanctions on large crude exporter Iran to pressure the government to curtail its nuclear activities accused by the West to be aimed at developing nuclear weapons have tightened oil markets and helped boost prices.
Oil prices nevertheless remain around 13% below their peak of the past year.
The US benchmark WTI crude closed in regular New York trade on Tuesday at US$96.33 a barrel, and fell only slightly in after-market trade following the G7 announcement.
That price compared with the year's low in late June of around US$77 a barrel, but still well beneath the 52-week high of US$110.65 and far below the July 2008 all-time peak of US$145 a barrel.
The London benchmark, Brent crude, was at US$112.58, compared with its June low of around US$89. In July 2008 Brent spiked to US$147 a barrel. AFP