The Group of Seven finance ministers and central bank governors will meet in Paris Monday and Tuesday as they grapple with higher long-term borrowing costs and the economic fallout from the Middle East conflict.  

The Iran war has sharply disrupted oil and gas flows through the Strait of Hormuz, which carries about 20% of global oil and liquid natural gas (LNG) shipments. That has stoked inflation concerns, with U.S. annual CPI inflation rising to 3.8% in April, the highest since May 2023. 

"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 Kyriakos Pierrakakis said in a statement Friday. "The situation in the Middle East highlights just how exposed our interconnected economies are to external shocks."  

The global economy will feel the pressure, "even if the conflict is resolved swiftly," Pierrakakis, who is also the Greek finance minister, said.  

U.S., UK, Japan Yields Climb

Those concerns were reflected in bond markets ahead of the meeting. 

U.S. Treasury yields spiked on Friday after strong inflation data and as traders priced interest rate policy under new Federal Reserve Chair Kevin Warsh. The yield on the 30-year bond jumped nearly 11 basis points to 5.121%, its highest since May 22, 2025, and approaching the October 2023 high. 

The British 30-year gilt yield is around 5.8%, near its highest level since 1998. UK borrowing costs are currently the highest in the G7, with 10-, 20-, and 30-year yields all above 5%. 

“We’ve seen bond yields rise across all three major markets,” Japanese Finance Minister Satsuki Katayama said on Friday at a press conference. “These moves appear to be reinforcing each other across the major markets. How to assess this situation is likely to be a topic of discussion at the G7 finance meetings." 

Benchmark Japanese government bonds ​have come ​under ⁠sustained pressure. The 10-year yield rose to around 2.71%, near multi-decade highs, as inflation fears and fiscal concerns mounted. 

Mideast Conflict Drives Inflation

Oil prices remain elevated with no immediate end to the war in the Middle East. 

International benchmark Brent crude futures for July rose more than 3% on Friday, closing at $109.26 a barrel. U.S. West Texas Intermediate futures for June rose more than 4% to $105.42 per barrel. 

Adding to market concerns, global oil inventories have fallen due to the "continued disruptions to seaborne trade through the Strait of Hormuz," the International Energy Agency (IEA) said on Wednesday. Worldwide inventories drew by 129 million barrels in March and by a further 117 million barrels in April, according to IEA preliminary data. 

"More than ten weeks after the war in the Middle East began, mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace," the IEA said. "Benchmark oil prices have posted wild swings in response to conflicting signals on whether the United States and Iran will soon reach a deal to end the conflict."

Trump Threatens Iran As Peace Talks Falter 

President Donald Trump said Iran has “an interest in reaching an agreement” as negotiations over the country’s nuclear program and the ongoing conflict continue without resolution. With talks stalling and military options back on the table, Trump gave no indication a deal was close.

“I have no idea," Trump said in a telephone interview with French broadcaster BFMTV. "If they don’t, they’re going to have a very bad time. They have an interest in reaching an agreement.” 

The New York Times reported on Friday, citing two Middle East officials, that the U.S. and Israel are preparing to resume joint attacks on Iran. A day later, Trump appeared to confirm those preparations, posting an AI-generated image on Truth Social alongside the caption “It was the calm before the storm."  

In the meantime, Iran has continued to attack its Arab Gulf neighbors. The United Arab Emirates said authorities in Abu Dhabi responded to a fire caused by a drone strike outside the Barakah Nuclear Power Plant, with no injuries reported and no impact on radiological safety levels.