U.S. policy entangled by rising price of oil

As violence spreads in the Middle East, the Bush administration is grappling with an unwanted side effect of its policies: higher oil prices caused by fears of a disruption in global oil supplies.

While the administration seeks to confront Iran, give Israel more time to defeat Hezbollah, and secure stability in Iraq, higher oil prices reduce its maneuvering room overseas and frustrate U.S. consumers at home.
Oil prices reached $78 a barrel at one point last week before dropping to $75. Although there are several reasons for the surge in prices, analysts agree that one is a “fear factor” of potential shortages.

Worries that the conflict in Lebanon could draw in Syria, or Iran, which in turn could threaten the flow of oil from the Gulf, have compounded those jitters, as has the Bush administration’s confrontation with Iran over its suspected nuclear weapons program.

But just as international politics are complicating the oil market, the oil market is complicating diplomacy as its reshapes the global balance of power.

International Herald Tribune