© Reuters. FILE PHOTO: A view reveals the emblem of the Organization of the Petroleum Exporting Countries (OPEC) on their headquarters in Vienna, Austria, June 2, 2023. REUTERS/Leonhard Foeger/File Photo
By Ahmad Ghaddar
LONDON (Reuters) – Israel’s army offensive in Gaza that adopted an Oct. 7 assault by the enclave’s ruling Islamist group Hamas has raised calls within the Middle East, significantly from OPEC member Iran, for utilizing oil as a weapon to punish Israel.
The battle has led many analysts, oil market watchers and politicians to attract parallels with the 1973 OPEC embargo, when Arab oil producers minimize off oil exports to a number of allies of Israel, together with the United States and Britain, following the Israeli-Arab battle that 12 months.
Analysts and OPEC sources, nevertheless, say that the vitality world these days is much totally different from 50 years in the past, taking part in down any chance of a brand new embargo.
The Organization of the Petroleum Exporting Countries and its allies led by Russia, or OPEC+, meet in Vienna on Sunday to determine on output coverage, and sources have informed Reuters that extra output cuts are more likely to be mentioned.
WHERE ARE CALLS FOR EMBARGO COMING FROM?
Last month, Iranian Foreign Minister Hossein Amirabdollahian urged members of the Organisation of Islamic Cooperation (OIC) to impose an oil embargo and different sanctions on Israel and expel all Israeli ambassadors.
Four sources from OPEC, which produces a 3rd of the world’s oil and consists of a number of Muslim states together with Iran, informed Reuters on the time that no speedy motion or emergency conferences have been deliberate by the group in mild of Iran’s feedback.
On Sunday, Iranian Supreme Leader Ayatollah Ali Khamenei appealed to Muslim states which have normalised relations with Israel to chop them for at the least “a limited time”, weeks after he referred to as for an Islamic oil and meals embargo on Israel.
During a joint summit between members of the OIC and the Arab League in Riyadh on Nov. 11, Muslim states didn’t comply with impose wide-ranging sanctions on Israel, as requested by Iranian President Ebrahim Raisi.
WHAT HAPPENED BACK IN 1973?
In 1973, Arab OPEC producers led by Saudi Arabia imposed an oil embargo on the United States in retaliation for its assist for Israel within the Middle East battle in October of that 12 months. The embargo, and subsequent output cuts, quickly added different nations as targets, together with the Netherlands, Britain and Japan.
The embargo led to extreme shortages with lengthy queues forming at gasoline stations. The unfavorable impression on the U.S. economic system was vital.
The embargo led to a spike in oil costs, however over the long run the disaster inspired the event of latest oil provinces outdoors the Middle East just like the North Sea and deepwater property, in addition to different vitality sources.
WHY IS ANOTHER EMBARGO UNLIKELY?
While Western nations have been the principle consumers of oil produced by Arab nations a half century in the past, these days Asia is the principle buyer for OPEC’s crude, accounting for about 70% of the group’s complete exports.
“The geopolitical environment is different compared to 50 years ago,” one OPEC supply mentioned about why a brand new embargo was not in prospect.
“A 1970s-style oil embargo by the Gulf oil-producing states appears unlikely because two-thirds of GCC (Gulf Cooperation Council) oil exports today are purchased by Asian clients and, importantly, the economic transformation currently planned and implemented in the region requires a sustained absence of conflict,” JPM Morgan mentioned in a word.
Morgan Bazilian, director of the Payne Institute, mentioned the vitality panorama has modified considerably over the previous 50 years. “The U.S. is now the largest producer of oil and gas, and has a long-established strategic petroleum reserve.”