G7 failed to address core issue in escalating US-Israel-Iran war, experts say

The G7 finance ministers’ meeting on Monday fell short of addressing the core issue in the escalating Middle East crisis — calling for an end to the US-Israel war with Iran — experts said on Tuesday.

The meeting took place against the backdrop of soaring oil prices, which have climbed to about $120 (about R1 950) a barrel, Iran’s closure of the strategic Strait of Hormuz shipping route and escalating missile attacks and a mounting death toll on all sides.

Despite the growing crisis, G7 nations said only that they were ready to take “necessary measures” to support the global supply of energy.

The meeting, which included finance ministers from G7 nations and representatives from the International Energy Agency, ended without an agreement to release strategic crude reserves.

Political economists Dr Sam Koma and Dale McKinley said the G7 meeting should have gone further by calling for an end to the war.

“The G7 finance ministers cannot afford to be bystanders to this escalating conflict in the Middle East region. The surging oil prices have the potential to trigger a devastating global economic crisis if the situation is not arrested. The G7 must call for a peaceful resolution of the conflict,” Koma said.

McKinley agreed. “The only alternative to a longer-term pain regarding the transportation of oil and gas is to end the war, coming to a diplomatic solution.”

Unisa senior political science lecturer Dr Ahmed Jazbhay said the G7 “must move beyond militarised and elitist crisis management”.

“Alternatives include de-escalation through inclusivity and diplomacy, with Iran reopening a multilateral energy corridor, accelerating strategic reserves and reducing dependence on conflict‑prone oil routes, rather than securitising global energy flows.

“The perspective of Iran in relation to this unprovoked and illegal war of aggression, must be central in conversations,” Jazbhay said.

With global oil and energy flows disrupted by Iran’s closure of the Strait of Hormuz, debate has intensified over alternative shipping routes. One option under renewed discussion is the Cape of Good Hope, although some analysts have questioned whether the longer route is economically viable.

Transport and logistics economists were upbeat, saying the shift could create financial opportunities for South Africa but warned that port inefficiencies could undermine the benefits.

Stellenbosch University logistics professor Jan Havenga said: “As far as the Cape route is concerned, South Africa is more ready than two years ago. Economic reform is taking hold, our ports are performing better and we should be able to handle an increase in traffic.”

Transport economist Ulrich Joubert said the benefits would depend on the capacity of Transnet’s port facilities.

“We are worried about the capabilities in our ports in handling high volumes of traffic. Our port authorities must get their act together for the country to succeed.” 

He said improved efficiency could bring significant economic benefits. “Port efficiencies will certainly lead to extra investments and extra volumes of businesses in Cape Town, Durban, Gqeberha, East London and Richards Bay.

“This will mean a need to invest more in infrastructure and getting the efficiencies to levels that our ports can once again achieve — a boost to port cities.”

However, Joubert cautioned that increased traffic around the Cape could also pose environmental risks. “In the 1970s and ’80s, we had a lot of traffic around the Cape but there was a risk to coastal sea life when we had oil spills. We have to be aware of these risks and act very quickly.”

He said the growing interest in the Cape route was driven by instability in the Middle East. 

“This makes all exports from the Middle East to Europe a little more expensive because the trip is much longer. With the petrol price set at $100 per barrel, it means a lot of extra expenses because of the longer route.”

Joubert said the political developments inside Iran could also prolong the conflict. “Given the background of Mojtaba Khamenei, the son of Iran’s late Ayatollah Ali Khamenei, having been chosen as the country’s new supreme leader, the world should expect Iran to adopt a hard-line political stance.

“This should lead to the conflict continuing for much longer than what US President Donald Trump anticipated.”

He warned that direct military involvement by US or Israeli forces could push oil prices even higher. “Should Israeli and American troops enter Iran, the conflict could escalate, with oil prices rising further.

“If you look at the current level, the focus that we have seen indicates that we could see R8 per litre increase in petrol and diesel prices by April. If the oil price goes to $150 per barrel and beyond, that will indicate a lot of trouble, with fuel prices rising quite substantially in months to come.”

Such increases would have ripple effects across the global economy. “This will have an impact on the ships’ route around the Cape, also affecting domestic economies, not only in South Africa but globally.”

Inflation could also rise, he warned. “When the oil prices went sky high in the 1980s due to the Iranian revolution and an embargo on oil exports from the Middle East, many industrialised countries resorted to printing money, a situation which had a lot of implications.

“If interest rates rise and you look at financial spin-offs for the Cape, more volumes of shipping traffic will mean more income,” Joubert said.

McKinley said the Cape route offered limited long-term alternatives. “If Iran shuts down its own ability to export oil, then its own revenues are going to be squeezed very quickly and that is going to have a material impact.

“In that context, the Cape route is the one that has been there historically for different trade issues. But in the context of costs and geopolitics, it is not viable in the longer term.”

He said any short-term gains for South Africa would probably be modest. “In terms of financial spin-offs, there have not been a great deal of spin-offs for the Cape route in the short term. This is because the Port of Cape Town has not reported any massive development in infrastructure.”

However, “if global uncertainty continues, with the Cape seen as an alternative, then you could see some benefits in relation to more shipping in the port and service to foreign ships on a stopover.

“That could have some geopolitical significance in terms of putting South Africa back into the geopolitical spotlight, lessening some of the more aggressive and negative moves that the US and the Trump administration have been making towards South Africa,” McKinley said.