New Energy Landscape: Amidst Israel’s military offensive in Gaza triggered by an Oct. 7 attack from Hamas, there are calls in the Middle East, notably from Iran, to use oil as leverage against Israel. Drawing parallels with the 1973 OPEC embargo following the Israeli-Arab war, some suggest a potential repetition. However, analysts and OPEC sources downplay the likelihood, citing significant differences in today’s energy landscape.
Iran’s Foreign Minister proposed an oil embargo and other sanctions on Israel, but OPEC members indicated no immediate plans for action. Recently, Iranian Supreme Leader Ayatollah Ali Khamenei urged Muslim states with ties to Israel to cut them temporarily. However, at a joint summit, Muslim states did not agree to broad sanctions on Israel as proposed by Iranian President Ebrahim Raisi.
In 1973, Arab OPEC producers imposed an oil embargo on the U.S. for supporting Israel, causing severe shortages and economic impact. However, today’s geopolitical dynamics, with Asia as the main customer for OPEC’s crude, make a similar embargo less likely. Asian clients, particularly China, hold significant influence, having brokered deals and becoming a crucial oil consumer. The energy landscape has evolved over 50 years, with the U.S. now the largest oil and gas producer, possessing a strategic petroleum reserve. The transformation in the Gulf region also emphasizes the need for sustained peace for economic development.
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