Oil Shocks: Biden, Iran and Fears of Another Price Jump

Oil analysts are jittery this week following comments on Sunday by Vice President Joe Biden that were widely interpreted as a green light to Israel to bomb Iran’s nuclear facilities. Many in the industry have long viewed such an attack as a prelude to a nightmare in global energy markets: Iran retaliating by sinking oil tankers in the Strait of Hormuz, blocking the route by which most Persian Gulf oil travels to world markets. “We will be in deep, deep trouble,” says Leo Drollas, deputy director and chief economist of the Center for Global Energy Studies in London. “The market will go berserk.”

The Obama Administration has hastened to correct the impression that Biden’s comments represented a U.S. nod and wink to an Israeli air strike. The Vice President had said that while the U.S. believes that military action against Iran would serve neither American nor Israeli interests, Israel is a sovereign nation, and if it felt threatened by Iran, it would be “entitled to” launch an attack on the Islamic Republic “whether we agree or not.” President Obama reiterated in Moscow on Monday that he opposes military action against Iran and instead wants a diplomatic solution to the nuclear standoff. But Prime Minister Benjamin Netanyahu has long maintained that Israel reserves the right to take matters into its own hands if U.S. diplomacy fails to deliver results.

Time