Iran’s call for oil embargo on Israel creates panic in the market

Iran's call for oil embargo on Israel creates panic in the market

The prospect of an oil embargo arising from the conflict between Israel and terrorist groups caused a sharp but brief jolt in oil prices on Wednesday.

Iran’s Foreign Minister, Hossein Amir-Abdollahian, called on Islamic countries to boycott Israel, including stopping oil shipments. Iranian media, He was speaking at a meeting of the Organization of Islamic Cooperation in Jeddah, Saudi Arabia.

Although Israel imports almost all of its oil, analysts said the immediate impact of such a ban would probably be small, since the country does not buy oil from major Persian Gulf producers such as Saudi Arabia and the United Arab Emirates or Iran.

Instead, Kazakhstan, where oil is mostly produced by joint ventures with Western companies including Chevron and Exxon Mobil, and Azerbaijan are among Israel’s largest suppliers. Nigeria is also a big supplier.

But the mere threat of sanctions brings back memories of the embargo on oil shipments initiated during the 1973 Arab-Israeli war 50 years ago. Sanctions imposed on the United States and some other countries for their support of Israel by the Arab members of the Organization of the Petroleum Exporting Countries led to long lines at gasoline pumps in the United States and high oil prices that persisted decades later. Are.

Concerns about broader sanctions appear to be partly responsible for sending prices of international benchmark Brent crude oil from $91.50 to nearly $93 a barrel on Wednesday. Brent prices later dropped back down.

“People are mostly afraid of what’s going to happen in the future,” said Victor Katona, an analyst at Kepler, a company that tracks petroleum shipments.

Following Iran’s lead in some broader confrontation with the West would be a huge leap for major producers like Saudi Arabia. “There is no indication yet that other OPEC members will engage or be willing to engage in such action,” said Richard Bronze, head of geopolitics at research firm Energy Aspects.

But Israel could be vulnerable to damage to its ports or cuts to shipments. Aware of the risks, Israel takes caution in maintaining supplier relationships with diverse sources, Mr. Bronze said.

Already, one of its two major oil ports, Ashkelon, has stopped receiving oil, apparently for security reasons, at least temporarily, analysts said. Israel can still get oil through another port in Haifa, north of Tel Aviv, although Mr Katona said it had not received any fuel for more than a week. He said Israel has at least a month’s supply of oil available in storage tanks.

An Israeli government spokesperson said it would not comment about the situation at the port “at this time”.

Mr. Katona estimated that Israel imports about 270,000 barrels of oil a day, with about 90,000 barrels a day, or a third, coming from Kazakhstan and 50,000 barrels a day from Azerbaijan.

Kazakhstan and Azerbaijan have majority Muslim populations, but they are unlikely to join the Iranian foreign minister’s call for sanctions. They are not among Middle Eastern states like Jordan and Egypt, whose publics closely follow tensions between Israel and the Palestinian populations in the occupied West Bank and Gaza.

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