Oil Prices and the Inevitability of Striking Iran

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With oil prices reaching $93 per barrel in the US earlier this week and the depreciation of the dollar to a record rate of $1.44 against the Euro, the possibility of oil price reaching $100 per barrel is no longer a speculation, but in fact, highly probable and perhaps imminent.

The causes of rising oil prices are many, most importantly the prevailing fear within various financial and commercial circles of an inevitable military strike launched by the US against Iran. Expectations of such a strike are high since Iran insists on continuing the development of its nuclear weapon while the US insists on preventing that. Some of President George’s Bush’s friends have reported him saying that he will not leave a nuclear Iran to his successor, regardless who that may be.
All American indicators show that the Bush administration is preparing for a strike, and the rising oil price to unprecedented levels is directly linked to the fears associated with this possibility which could inflame the whole region and disrupt the flow of oil supplies from a few countries in the region if Iran resorted to the suicidal attacks that it has been threatening to use in retaliation in case its nuclear plants were attacked by the US.

Iran’s policy in the Middle East, starting with Iraq and including Lebanon, Palestine and the Gulf, implies that this state intends to use its huge oil revenues to push its allies in the region into wars in their locations in the hope of achieving regional hegemony and control for a radical regime that aims at becoming a nuclear power in the region.

The fears of Iranian retaliation to an American strike are also varied, and the presence of someone of the caliber of Ahmedinejad in the Iranian presidency cannot be assuring. Even within the Iranian regime itself, there is a sense of discontent and fear toward his domestic and foreign policies, proven by the resignation of Ali Larijani who was in charge of Iran’s nuclear negotiations. Less assuring are the reports about the presence of Revolutionary Guard groups in training camps in Syria. All this is causing high levels of anxiety in the Gulf area, the main source of oil.

Rising oil prices represent higher revenues and profits for the countries of the region and that the Gulf countries are witnessing rapid growth in construction and mega projects that ensure the creation of new job opportunities for the residents of Arab countries that suffer economic difficulties. Over the past five years for example, the number of Lebanese working in Qatar has risen from a mere 5,000 to over 40,000, and in UAE, almost 200,000 Lebanese work there, let alone the thousands who live and work in Saudi Arabia. This is not to mention the Iraqi, Moroccan and Syrian communities. Despite all this, the rising oil price brings with it fears that end any satisfaction derived from high oil revenues because Iran’s risky policies threaten the entire region and President Bush’s hardened position against Iran’s possession of nuclear capabilities increases the risks of widespread devastation.

Dar Al Hayat