Embargo Troubles: Will History Repeat Itself in the Oil Market?

Why an Oil Embargo on Israel is Unlikely to Gain Traction

Unlikely to happen Oil embargo on Israel calls

London, Nov 21 (ANBLE) – Brace yourselves, folks! The recent military offensive in Gaza by Israel following an Oct. 7 attack by Hamas has reignited talks of using oil as a weapon to punish Israel. That’s right, we’re talking about an embargo, a blast from the past that rocked the oil market back in 1973. Hold onto your hats and let’s dive into the details, shall we?

Déjà Vu: Parallels with the 1973 OPEC Embargo

The current conflict has many analysts and oil market watchers drawing comparisons with the infamous 1973 OPEC embargo. Ah, the good ol’ days when Arab oil producers decided to cut off oil exports to several countries, including the United States and Britain, in response to their support for Israel during the Israeli-Arab war. Cue the long queues at gas stations and the economic chaos that ensued.

Needless to say, the energy landscape has undergone some major changes since then. Contrary to the doomsday predictions, experts believe that the possibility of a new oil embargo is slim. The Organization of the Petroleum Exporting Countries (OPEC) and its allies are set to meet in Vienna to discuss output policy, but additional output cuts are seen as more likely than an embargo. Phew!

From Whence the Calls for Embargo?

Enter Iran, stage left. The Iranian Foreign Minister, Hossein Amirabdollahian, has been leading the charge, urging members of the Organisation of Islamic Cooperation (OIC) to impose an oil embargo and other sanctions on Israel. Now, before you start frantically checking your gas tanks, rest assured that no immediate action or emergency meetings are in the works, according to sources from OPEC. Looks like we’re safe, folks…for now.

But wait, there’s more! Iranian Supreme Leader Ayatollah Ali Khamenei has doubled down on the rhetoric, calling on Muslim states that have normalized relations with Israel to cut those ties for “a limited time.” Ebrahim Raisi, the Iranian President, also made a similar request at a joint summit between the OIC and the Arab League. However, Muslim states did not agree to impose wide-ranging sanctions on Israel. Another close call, it seems.

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Lessons from the Past: What Happened in 1973?

Let’s hop in our time machines and take a quick trip back to 1973. Arab OPEC producers, led by Saudi Arabia, decided to teach the United States a lesson by imposing an oil embargo in retaliation for their support of Israel. The effects were immediate and severe, with long queues forming at gas stations and the U.S. economy taking a hit. It was like the world had gone mad for oil!

But, as they say, every dark cloud has a silver lining. The crisis sparked the development of new oil sources outside the Middle East, including the North Sea and deepwater assets. It also prompted the exploration of alternative energy sources. So, in a way, the embargo inadvertently laid the groundwork for diversifying the world’s energy mix. Thanks for the unintended push, OPEC!

A Different World: Unlikely to Repeat History

Now, let’s address the elephant in the oil field: why is another embargo unlikely? Fast forward to today, and we find that the game has changed. Asia, not the West, is now the main customer for OPEC’s crude, accounting for a whopping 70% of total exports. Looks like OPEC found a new pen pal, and its name is Asia.

According to experts, the geopolitical landscape has evolved significantly in the past 50 years. The rise of China as an influential player in the Middle East has further diminished the likelihood of an embargo. China has brokered deals between Saudi Arabia and Iran, becoming a crucial client for Middle Eastern oil producers and a driving force behind oil demand growth. Say goodbye to those long gas station queues, my friends!

And let’s not forget about Uncle Sam. The United States has become the largest producer of oil and gas, boasting a strategic petroleum reserve that can weather any storm. So, even if history were to repeat itself, the U.S. is armed with its oil-producing prowess, ready to greet any embargo with a defiant “not today!”

The Bottom Line: No Need to Lose Sleep (or Gas) over an Embargo

So, dear readers, there’s no need to panic or rush to the nearest gas station just yet. While the idea of a 1970s-style oil embargo may tantalize the nostalgic among us, the shifting dynamics of the global oil market make it highly unlikely. Asian markets have become the main players, and China’s influence is growing by the day. Besides, the U.S. has learned a thing or two since the last embargo, and it’s not about to be caught off guard.

As always, we’ll keep our eyes on the oil market and update you with any juicy developments. Until then, stay tuned, stay filled (with gas), and keep those engines roaring!

We’d love to hear your thoughts on the possibility of an oil embargo. Do you think history will repeat itself, or are we on a different path this time? Feel free to share your comments below!

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