Governments scrambled to limit the impact on economies and consumers from the widening Iran war, which fuelled a record surge in oil prices on Monday after key producers cut output and Tehran signalled that hardliners would remain in charge.

In a sign of mounting governmental concern over supply disruptions, the Group of Seven finance ministers will discuss the possibility of a joint release of emergency oil reserves in a meeting on Monday, a French government source said.

The European Union's oil and gas supply coordination groups will meet on Thursday, a spokesperson said on Monday. EU countries are required to hold oil stocks covering 90 days' worth of consumption.

In South Korea, which buys 70 per cent of its oil from the Middle East, President Lee Jae Myung said Seoul would cap fuel prices for the first time in nearly 30 years and he warned against panic buying.

In Japan, a senior member of Parliament on Sunday said the government had instructed a national oil reserve storage site to prepare for a possible crude release, although the country's chief cabinet secretary later said no decision had been made to release stockpiles.

Japan imports around 95 per cent of its oil from the Middle East. It has reserves to cover 354 days of consumption.

Elsewhere, Vietnam removed import tariffs on fuels and Bangladesh shut universities to conserve electricity and fuel, while China last week asked refiners to halt fuel exports and try to cancel shipments that were already committed.

Indonesia will increase the amount it has allocated for fuel subsidies in its state budget, its finance minister said on Monday.

Trump downplays US price surge

President Donald Trump tried to downplay concerns about rising US gasoline prices, which were up 11 per cent for the week on Friday, while US Senate Minority Leader Chuck Schumer called on him to sell oil from the Strategic Petroleum Reserve.

"Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace," Trump posted on Truth Social on Sunday night. "ONLY FOOLS WOULD THINK DIFFERENTLY!"

Oil jumped 25 per cent, with Brent on track for a record one-day gain, while Opec producers Kuwait and Iraq cut output over the weekend as the crucial Strait of Hormuz remained effectively shut.

Brent jumps 25% on supply fears

Across Asia, which sources 60 per cent of its oil from the Middle East, equities slid and the dollar rose as worries grew that the disruption in energy supplies could be prolonged.

Iran on Monday named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, a move that is expected to draw Trump's ire. Weekend attacks on Iranian oil storage facilities fuelled fears of retaliatory strikes on energy facilities.

In Bahrain, Bapco Energies declared force majeure on Monday following an attack on its refinery complex, the company said.

"Oil prices have now gathered all the ingredients for a perfect storm - Middle East Gulf producers cutting output, the prolonged closure of the Strait of Hormuz ... all compounded by a growing pessimism about a quick turnaround in the current situation," said Kpler senior oil analyst Muyu Xu.

Iraq cut oil production at its main southern oilfields by 70 per cent to 1.3 million barrels per day, three industry sources said on Sunday, while Kuwait Petroleum Corp began cutting oil output on Saturday and declared force majeure.

No. 2 LNG exporter Qatar has already halted exports of the superchilled fuel and analysts predict that the United Arab Emirates and Saudi Arabia will also have to cut output soon as they run out of oil storage due to the Strait of Hormuz closure.

Africa on tenterhooks

Surging oil prices are also rippling across African economies, threatening higher fuel costs, rising inflation and renewed pressure on currencies across the continent.

Africa imports most of the petroleum products it consumes. The impact of higher oil prices across Africa will be uneven.

Countries like Kenya and Uganda say their supply remains stable even as they work on ensuring continuity. Nigeria and Ghana produce crude oil but import most of their refined petroleum products, limiting the benefits to them of higher global prices.

Still, sustained high prices could bring a windfall for Africa's major oil exporters. Nigeria exports roughly 1.5 million barrels of oil per day and has based its medium-term fiscal framework on oil prices between $64 and $66 per barrel through 2028.

For most African households, however, the immediate effect is likely to be higher living costs.

Peter Attard Montalto, managing director at South African advisory firm Kruthan said the crisis is also testing African economies.

"So far the impact has really been muted, for countries like South Africa," he said, noting that recent economic reforms have helped stabilise the country's currency and bond markets.

"Still, higher oil and gas prices are expected to filter into inflation in the coming months," Montalto said.

Countries already operating under programmes from the International Monetary Fund could face additional strain as energy import bills drain scarce foreign exchange reserves. Among the most vulnerable, analysts warn are Sudan, The Gambia, Central African Republic, Lesotho and Zimbabwe.