G7 finance leaders ready to act to mitigate Iran war fallout, Lescure says

By David Lawder

WASHINGTON, April 16 (Reuters) - Group of Seven finance ministers and central bank governors have agreed to stay ready to act to mitigate economic and inflation risks caused by the Middle East war's energy price and supply shocks, French Finance Minister Roland Lescure said on Thursday.

Lescure told reporters on the sidelines of International Monetary Fund and World Bank spring meetings that there was a wide range of outcomes for the global economy, depending on how quickly the conflict ends.

With G7 backing, the International Energy Agency last month released a record amount of oil from strategic reserves to help counter the cut-off in supplies from Gulf countries through the Strait of Hormuz.

"We need to make sure that we understand where the balance of risks is tilting in the next few weeks," Lescure said after meetings of G7 finance ministers and central bank governors on Wednesday and Thursday.

"We are meeting again in a month's time in Paris and we want to make sure that we monitor the situation, we evaluate the impact and that if we need to act, as we did with releasing inventories a few weeks back, we will," Lescure added.

France holds this year's G7 presidency of the industrialized democracies club that also includes the United States, Canada, Japan, Britain, Germany and Italy.

Bank of France Governor Francois Villeroy de Galhau added that G7 central banks also pledged to take steps necessary to prevent the Iran war's energy and commodity shock from becoming embedded into core inflation second- and third-round price impacts.

"We will act, without hesitation, if and when necessary, but we are not in a rush mode. We need to have more data" about the impact of the price shocks.

Lescure said that the G7 finance leaders, meeting for the first time in person this year, also vowed to continue to aid Ukraine, including helping it prepare for next winter after a difficult winter this year with constant Russian attacks on Ukrainian energy infrastructure.

"Ukraine should never be a collateral damage of the current war in Iran," Lescure said. "Russia mustn't be getting benefits from what's happening in Iran."

U.S. Treasury Secretary Scott Bessent, who skipped Thursday's G7 meeting on critical minerals, said on Wednesday that he would not renew a 30-day temporary waiver of sanctions on Russian oil stranded at sea. The waiver, which expired April 11, was meant to ease price pressures by releasing more oil into global markets.

The G7 finance leaders also discussed joint efforts to create alternative supply chains for rare earths and other critical minerals to reduce their countries' dependency on China, the world's dominant supplier. He said that the group would keep working on "very concrete steps" that could be presented to a G7 leaders meeting in June in the French Alpine spa town Evian-les-Bains. (Reporting by David Lawder; Editing by Andrea Ricci)