Oil prices soared to around $120 a barrel before falling on Monday as Iran’s war escalated, threatening production and shipping in the Middle East and hitting financial markets.

Prices fell only after French President Emmanuel Macron said Group of Seven nations could draw on their emergency oil reserves in response to rising prices. But the G7 countries have not yet decided on the possible “release of oil reserves,” France’s finance minister said on Monday.

“We are not there yet,” Minister Roland Lescure said in Brussels after chairing a meeting of his G7 counterparts. “We are ready to take the necessary and coordinated measures to stabilize the markets, such as strategic storage.”

The price of a barrel of Brent crude, the international standard, rose to $119.50 a barrel early in the day, but was later trading near $101 a barrel, up nine percent.

West Texas Intermediate Oil, the light, sweet crude produced in the United States, soared above $119.48 a barrel but fell back to near $100.

Iran on Monday named hardline Ayatollah Mojtaba Khamenei to succeed his late father as supreme leader, signaling there is no letup in the war.

The appointment marked a new sign of defiance from Iran’s embattled leadership after more than a week of intense US and Israeli bombing, suggesting Tehran is no closer to giving up what it sees as a fight for the country’s existence.

Oil depots in Tehran burned after overnight attacks by Israel. The death toll from the war on civilian targets rose as Bahrain accused Iran of attacking a desalination plant vital to its drinking water supply.

Bahrain’s national oil company declared force majeure on its shipments after an Iranian attack set its refinery complex on fire. The legal declaration frees the company from contractual obligations due to extraordinary circumstances.

“Let’s not discount the severity of this escalation. Even if, say, Trump comes and calms the market, I think the impact of this will last for many years,” said June Goh, senior oil market analyst at Sparta Commodities, during an interview with CBC News on Sunday night.

“There will be a reorganization of the strategy of many Asian players, there will be a need for diversification and obviously Canada will be well positioned to be there,” he said.

Oil prices have risen as the war, now in its second week, ensnares countries and places that are critical to the production and movement of oil and gas from the Persian Gulf.

The G7 chooses not to release oil reserves for now

French President Emmanuel Macron had said earlier on Monday that “the use of strategic reserves is a planned option.” He said G7 leaders could meet this week to coordinate a response to rising energy prices.

On Saturday, US President Donald Trump downplayed the idea of ​​tapping the US Strategic Petroleum Reserve, saying US supplies were plentiful and prices would soon fall.

According to independent research firm Rystad Energy, approximately 15 million barrels of crude oil (about 20 percent of the world’s oil) are shipped through the Strait of Hormuz each day.

The threat of Iranian missile and drone attacks has all but prevented tankers carrying oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran from traveling through the strait, which borders Iran to the north.

Iraq, Kuwait and the United Arab Emirates have reduced oil production as storage tanks fill up due to reduced capacity to export crude. Iran, Israel and the United States have also attacked oil and gas facilities since the war began, worsening supply concerns.

High gas prices shake Asian economies

Rising oil and natural gas costs are driving up fuel prices, cascading to other industries and rattling Asian economies that are especially vulnerable due to the region’s heavy dependence on Middle Eastern imports.

Iran exports about 1.6 million barrels of oil a day, mainly to China, which has called for an immediate end to the fighting. Beijing may need to look elsewhere for supplies if Iran’s exports are disrupted, another factor that could drive up energy prices.

“All parties have the responsibility to ensure stable and smooth energy supply,” Chinese Foreign Ministry spokesman Guo Jiakun said at a briefing on Monday. “China will take necessary measures to safeguard its own energy security.”

South Korean President Lee Jae Myung on Monday warned of strict sanctions for refineries and gas stations caught price gouging or colluding, saying it would be prudent to find alternatives to supplies that must travel through the Strait of Hormuz. The country’s Kospi index fell six percent to 5,251.87.

Across Southeast Asia, rising prices have led to long queues outside gas stations.

“Higher oil and gas prices will affect everyone and our economy,” said Le Van Tu, waiting outside a gas station in Hanoi, the Vietnamese capital. “All activities, including those that use gasoline-based transportation, will be affected.”

The last time Brent and US crude futures traded near the current level was in 2022, after Russia invaded Ukraine.

Why the plane ticket could become more expensive

Higher energy costs raise inflation, putting pressure on household budgets and affecting consumer spending, which is the main driver of many large economies. Those concerns have spread to financial markets, sending stock prices sharply lower.

Jet fuel prices could also rise in the coming months. US airline stocks fell last week and United Airlines CEO Scott Kirby said on friday that rising fuel prices could lead to an increase in airfares.

Goh, the oil analyst, said travelers are advised to book trips as soon as possible.

Many airlines have fuel hedging programs, he said, which can help offset a sudden increase in fuel costs. But they won’t be able to sustain that forever.

“The price of jet fuel at a higher level will trigger and the airlines themselves will not be able to fully absorb it. Therefore, the consumer will have to feel the pain,” he said.

Meanwhile, the average retail price of gas in Canada hit $1.54 per liter on Monday. according data from GasBuddy.com.

In the United States, the average price of a gallon of regular gasoline rose to $3.48 early Monday, nearly 50 cents higher than the previous week, according to the American Automobile Association. Diesel, widely used in shipping, sold for about $4.66 a gallon, a weekly increase of more than 80 cents.

The price of natural gas in the United States also rose during the war, although not as much as that of oil. It was selling for about $3.34 per 1,000 cubic feet early Monday morning. That’s more than Friday’s closing price of $3.19.