Emad Barsoum writes: Oil in the Times of War
In October 1973, Egypt fought a liberation war against Israel to retrieve back the lands occupied by the Israeli army since June of 1967. That war witnessed the first use of Petroleum Oil as a weapon or as leverage to be used against enemies or supporters of one of the parties to the conflict. During this war, the Oil producing Arab countries, and in solidarity with Egypt, banned Oil exports to western European countries and the USA, leading to an unprecedented hike of the Oil prices, which led to a massive increase in prices of goods and services.
In his book “A Hundred Million Dollars a day,” Michael Field demonstrates how the world, for the first time, had realized the importance of Oil as an absolute strategic commodity and weaponry. Since then, the USA has been very determined to control this commodity and weaponry. This was manifested in the USA’s quest to buy as much Oil as they could store, despite being the number one oil producer globally.
In the meantime, during the war of 1990, the liberating of Kuwait, followed by extremely powerful airstrikes, and the bombing of Iraq in January 1991, the world expected to witness another historical surge in Oil prices. Nonetheless, Oil did not reach any limits as speculated. According to a report made by the writer of this article and published in the daily The Egyptian Gazette before the airstrikes, the reasons behind that were all the precautions that nations around the world had put in place since the harsh lesson of the 1973 war in the Middle East.
After the economic sanctions imposed on Russia due to its war on Ukraine, which banned the importation of Russian Oil and Gas, the world might have lost 5-10% of its production, while prices have extremely risen to unproportionable levels to that shortage of supply. But why now? Why are Oil prices rising rapidly and hitting unreasonable levels, and consequently not in accordance with the supply and demand basis?
The major players of the Oil trade in the world found it an exclusive opportunity to recover some losses incurred during the slow days of the Pandemic and shake up the economy after two years of recession. In addition, the increase in prices of goods and services, which follows the high rise of Oil prices, will take them to levels that cannot be reversed again. Accordingly, it is the ultimate benefit of few corporations and investors, but the significant loss to the economy of the USA and the West.
Again, the controversial situation forces itself. How can the USA, being the number one consumer of Oil globally and the economy with the most players in the world business and investments, let the Oil prices upswing that high and fast?
By the sanctions on Russian Oil and Gas, the USA is, in fact, shooting itself in the foot, especially when the major Arab Gulf Oil-producing countries did not respond to USA’s demand to increase prices to compensate for the decline in the volume of Oil traded due to the sanctions on the Russian Oil. In addition, most of the other major oil producers like Iran and Venezuela are not the allies that the USA would depend on.
It is clear that the American administration did not carefully calculate the usage of Oil as a weapon in its virtual war on Russia, and it is the time to return to diplomacy and reason, and abandoning the use of innocent citizens of Ukraine and the world in such a virtual war.