April 5, 2002
Summary
The threat of an oil embargo against the West, particularly the United States, has more weight in light of the current violence in the Palestinian territories. However, an embargo seems unlikely for a number of reasons. Any targeted state would be able to procure replacement oil from a number of sources. Furthermore, those that would be hit hardest by an embargo include countries in Asia that are sympathetic to the Palestinian cause and are still struggling with the effects of Asia's own regional recession.
Analysis
Stripped of the Middle East's political complications, the underlying energy market is broadly stable. That does not mean oil prices are likely to drop back into the $15-per-barrel range. The escalation of the Israeli-Palestinian crisis has nurtured a climate in which spurious threats can develop quite long legs. Recent threats of embargos against the United States may not hold any more weight than they did last year, but against a bloodier backdrop, they carry more significance.
Summary
The threat of an oil embargo against the West, particularly the United States, has more weight in light of the current violence in the Palestinian territories. However, an embargo seems unlikely for a number of reasons. Any targeted state would be able to procure replacement oil from a number of sources. Furthermore, those that would be hit hardest by an embargo include countries in Asia that are sympathetic to the Palestinian cause and are still struggling with the effects of Asia's own regional recession.
Analysis
Stripped of the Middle East's political complications, the underlying energy market is broadly stable. That does not mean oil prices are likely to drop back into the $15-per-barrel range. The escalation of the Israeli-Palestinian crisis has nurtured a climate in which spurious threats can develop quite long legs. Recent threats of embargos against the United States may not hold any more weight than they did last year, but against a bloodier backdrop, they carry more significance.