A glance at financial markets shows the biggest obstacle to a green light from President Barack Obama to stop Iran’s nuclear project is fear of higher oil prices.
China and Russia have a vested interested in Iranian nuclear facilities, but except for them, as well as Syria and Lebanon, almost no one -- especially not the Gulf States, Israel and the United States -- wants to see Iranian President Mahmoud Ahmadinejad armed with a nuclear warhead. Such a weapon would be aimed at carrying out his “dream” of wiping Israel off the map and dominating the region with an Islamic empire.
A glance at financial markets indicates that the biggest obstacle to the Obama administration’s giving the green light to prevent Iran from getting “the bomb” is not fear of a military response but rather of an oil-driven recession.
“Israel cares much more about Iran having a bomb than the price of oil, while the West and East have an overwhelming interest in keeping the flow of oil going,” David Kelly, chief market strategist at J.P. Morgan Fund told CBS MarketWatch this week.
Military officers and analysts have batted the question of an attack on Iran around the ballpark, with estimates of Iran’s reaction ranging from terrorist attacks on American overseas bases and Israeli targets around the world to a raging regional Middle East war.
However, the fragile American economy in an election is perhaps the most important factor in President Barack Obama’s decision “to attack or not to attack.”
“The root of his concerns takes us back to oil prices, which are rising because of both the sanctions and the threat of military conflict, Eyal Gabbai, until recently the director of the office of Prime Minister Binyamin Netanyahu, recently told The Wall Street Journal.
“I’m not sure that Americans are willing to pay the price of rising prices at the pump,” he said.
Israel, which has long experience in suffering Arab terrorist attacks since before the re-establishment of the Jewish state, sees Iranian nuclear capability as a clear and present threat.
The rising price of oil has sedated the Americans’ eagerness to disable Iran.
An Israeli or US-led attack on Iran’s nuclear sites would probably be met with Iran’s closing, at least temporarily, the Strait of Hormuz, the waterway for more than 20 percent of the world’s oil supply.
Crude oil would soar at least 50 percent if not 100 percent higher than now, oil experts predict. A parallel increase in gasoline would cost American consumers a bundle, and possibly cost President Obama reelection, all of which makes oil Iran’s best protection against an attack.
The price of crude oil now is around $106 a barrel, the highest since last April when “black gold” reached the $110 a barrel level before dripping back to the low $70s.
It did not take long for the higher price to filter down to local gas station. The price at the pump has soared by 50 cents a gallon since the beginning of the year, to approximately $4 a gallon in some places. The average price now is approximately $3.75 a gallon.
The older generation has sharp memories the 1970s, when oil jumped four-fold to $12 a barrel during the Yom Kippur War and then to $40 at the end of the decade, driving the United States into a recession.
Economists point out that the United States is more energy efficient and the economy more stable, although not roaring, than before, but there is a limit to how much it can withstand.
President Obama is enjoying his highest popularity in more than year as the unemployment rate drops, but public spending is bound to drop if gasoline prices soar much past $4 a gallon.