Iran Attack More Likely With Low Oil Prices

Iran attack more likely with low oil prices
By Nick Mottern | UPI.com

If the Bush administration is hawkish enough to attack Iran or support an Israeli attack before it leaves office, the drop in world oil prices to the $80 to $90 a barrel range may give it enough of a cushion against the consequence of skyrocketing oil prices.

The administration may gamble that a quick, tightly targeted strike against Iran's nuclear facilities would bring only a brief, modest spike in oil prices, with the price settling back down in a week's time given the apparent downward trend in world oil demand.

The oil price trend must be of significant concern to the Iranian government that not only depends on oil as its economic mainstay but has seen in high oil prices a measure of protection against attack.

In June, when oil hit $139 a barrel, British newspaper The Telegraph reported that Iran's Maj. Gen. Mohammed Ali Jafari said in an Iranian newspaper that any military action against Iran would mean "the oil price will rise very considerably, and this is a factor deterring the enemies."

The Telegraph noted that "about 40 percent of all world oil exports flow through the 35-mile wide Strait of Hormuz, banking along its northern side by Iran. With world oil supplies already constricted, any Iranian action could push energy prices through the roof."

Iran's oil price protection factor is now significantly diminished, given global economic prospects, compared to several months ago when oil went above $130 a barrel and $200 per barrel oil was considered an immediate possibility.

Noting that oil prices have dropped nearly 40 percent since a high of $147 a barrel in July, British newspaper The Guardian reported on Oct. 7: "Oil demand in the United States, the world's largest energy consumer, has dived this year under the weight of record prices, while consumption in Japan and Europe has also weakened.

"There are now worries," the report continued, "about whether China, where rapid economic growth helped trigger oil's rise from $20 a barrel in 2002, can keep delivering consistent growth."

An attack against Iran is off the radar of the U.S. media, now focused on economic shocks and the presidential campaign.

However, French Foreign Minister Bernard Kouchner told Haaretz, the Israeli daily, in an interview on Oct. 3 during a visit to Israel: "I know that some people in Israel and in the army are preparing a military solution or not a solution but a military attack (on Iran)....This is not, according to my opinion, the solution."

While he said that "Iran with an atomic bomb is not acceptable at all," he wants to use diplomacy and sanctions to persuade Iran not to develop a nuclear weapon. "Talking, talking, talking and offering dialogue, sanctions, sanctions, sanctions is the alternative to bomb first," he said.

Iran maintains that its nuclear program is intended solely for generating electricity.

An Israeli attack on Iran with U.S. backing might be viewed within the Bush administration as timely, not only with respect to oil prices but the presidential campaign. Such an attack would immediately turn public attention from economic issues to the military enforcement of foreign policy, a shift that might favor John McCain.

Barack Obama quite likely would have to support the attack, having said that Iran cannot be allowed to possess a nuclear weapon. But he might be portrayed as "weak" on the Iran issue because he has said he prefers to address Iran's nuclear program with negotiations rather than military force.

The worsening economic situation in the United States and the world that is favoring the Obama campaign and pressing down on oil prices also may be increasing a sense of urgency in Washington and Israel to act while the Bush administration has control of U.S. forces.

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(Nick Mottern is director of ConsumersforPeace.org.)