WASHINGTON — 

Experts predict that the current situation in the Middle East, 50 years after the 1973 Arab oil embargo, could potentially cause disruptions in global oil supplies and result in higher prices. However, it is unlikely that we will see a repeat of the extreme price increases and fuel shortages that occurred during the previous crisis.

The leader of the International Energy Agency stated that the ongoing conflict between Israel and Hamas will further strain the already tight oil markets due to reduced production from Saudi Arabia and Russia, as well as the predicted increase in demand from China.

According to Fatih Birol, the executive director of the Paris-based IEA, the current conflict may cause oil prices to rise, leading to volatility in the markets. This could have a negative impact on inflation, particularly for developing countries that rely on imported oil and other fuels.

On Thursday, the global standard for oil prices, Brent crude, was priced at over $91 per barrel. This is an increase from the price of $85 per barrel on October 6th, the day before Hamas launched an attack on Israel resulting in the deaths of numerous civilians. In response, Israel conducted airstrikes on Gaza, causing significant damage to entire communities and resulting in the deaths of hundreds of Palestinian civilians in the following days.

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The volatility following the assault caused crude oil prices to reach a peak of $96.03.

The cost of oil is influenced by the amount that is being utilized and the amount that is accessible. The latter is in jeopardy due to the ongoing Hamas-Israel conflict, despite the fact that the Gaza Strip does not have significant crude production.

A concern is that the conflict may cause issues with Iran, which houses some of the largest oil reserves globally. Though their production has been limited by sanctions, oil is still being exported to China and other nations.

According to Andrew Lipow, the president of Houston-based consultant Lipow Oil Associates, for prices to increase steadily, there would need to be a disruption in supply.

An attack by Israel on Iranian oil infrastructure could cause prices to rise worldwide. Furthermore, if the Strait of Hormuz, which is located south of Iran, were to be closed, it could also significantly impact the global oil market as a large portion of the world’s oil supply passes through this waterway.

Lipow stated that until a similar occurrence takes place, the oil market will continue to follow suit with others by closely observing the happenings in the Middle East.

It is highly improbable that the gas lines seen during the 1970s will reoccur due to the fact that oil production in the United States is currently at its peak. The U.S. Energy Information Administration, a division of the Energy Department, stated that American oil production reached 13.2 million barrels per day in the first week of October, surpassing the previous record set in 2020 by 100,000 barrels. The weekly domestic oil production has doubled since October 2012.

In 1973, the energy crisis served as a valuable lesson and highlighted the importance of American energy dominance in ensuring global security, prosperity, and freedom. According to Mike Sommers, the president and CEO of the American Petroleum Institute, which is the primary lobbying organization for the U.S. oil industry.

During a speech on Wednesday commemorating the 50th anniversary of the 1973 oil embargo, Sommers noted the significant difference between current U.S. production and the weakened state of America during the Arab oil embargo. He urged policymakers to learn from the events of 1973.

Sommers emphasized the importance of maintaining our strategic advantage and not giving up our leadership in the energy sector. He has consistently voiced his disapproval of President Joe Biden’s policies that limit new oil leases, which are aimed at addressing global climate change.

According to Sommers’ speech at the Hudson Institute in Washington, the state of the world is uncertain with ongoing conflicts in Europe and the Middle East, and a growing demand for energy that exceeds its supply, making energy security a pressing issue.

According to Sommers, we currently have a greater need for American oil and gas. Let’s remember the lessons we learned from 1973 and prevent the occurrence of another energy crisis.

At this time, the current situation is not a replica of the crisis that occurred in 1973. Arab nations are not collectively attacking Israel, and OPEC+ countries have not taken action to limit production or raise prices significantly.

There are multiple unpredictable factors in the energy industry. One of them is the availability of Iranian oil. In order to prevent a sudden increase in gas prices and inflation, the United States has allowed some shipments of Iranian oil to countries like China, rather than fully implementing sanctions targeting Iran’s nuclear program.

Iran has cautioned Israel against initiating a land-based attack in the Gaza conflict. If Iran were to increase the conflict, potentially through the involvement of Hezbollah militants in Lebanon with support from Iran, the U.S. may alter their position. According to analysts at Commerzbank, if the U.S. were to further enforce sanctions on Iranian oil, it would significantly impact the oil market.

Members of both political parties have called on Biden to prevent the sale of Iranian oil, in an effort to cut off a major source of funding for the government.

One factor to consider is how Saudi Arabia will react to a potential limitation of Iranian oil. Experts in the oil industry believe that although the Saudis may appreciate the recent increase in oil prices, they do not desire a significant spike that could lead to inflation, increased interest rates from central banks, and potential economic downturn in countries that rely on oil consumption. This could ultimately result in decreased demand for oil.

One factor that is uncertain is the potential increase in oil supply from Venezuela. On Wednesday, the U.S. made a temporary decision to lift certain sanctions on Venezuela’s oil, gas, and gold industries, following an agreement between the government and a section of the opposition to collaborate on reforming elections.

According to senior oil market analyst Sofia Guidi Di Sante from Rystad Energy, Venezuelan production may see a rise in 2024. However, in the next six months, there could be a modest increase of 200,000 barrels per day, which is relatively small in comparison.

Senator John Barrasso, the leading Republican on the Senate Committee for Energy and Natural Resources, strongly criticized the United States’ actions as a “trick” that only pleases a oppressive Venezuelan government.

According to Barrasso, President Joe Biden’s energy strategies prioritize other countries over America. This is evident in his actions to terminate the contentious Keystone XL pipeline and reduce the amount of oil in the Strategic Petroleum Reserve, which is now at its lowest level since the 1980s. On Thursday, the Energy Department announced plans to begin replenishing the reserve in December, with monthly requests for offers continuing until May 2024.

According to Barrasso, Biden has reduced restrictions on Iran, a country known for supporting terrorist activities in the Middle East. With Israel currently facing attacks, Biden is searching for ways to hide the negative effects of his irresponsible decisions. Barrasso believes that America should never have to rely on oil from oppressive leaders or those involved in terrorism.

The Treasury Department has announced that it has identified approximately 1,000 people and organizations associated with terrorism and funding for terrorism linked to the Iranian government and its allies, such as Hamas, Hezbollah, and other groups in the area.

The Treasury stated that they will continue to take necessary measures to combat Iran’s disruptive actions in the region and globally.

Source: voanews.com