DUBAI, United Arab Emirates – The call to use oil as a weapon against Israel's friends once would have echoed in capitals across the Middle East. But even as fighting widens in Gaza, threats of an oil embargo by some in Iran and Bahrain are falling flat.
Key Persian Gulf producers like Saudi Arabia and even top officials in the countries behind the boycott calls are keeping quiet, reflecting a focus on their struggle to deal with the steep plunge in world oil prices.
"An oil embargo is just bad for business," said Serene Gardiner, oil products analyst at Standard Chartered Bank in Dubai.
On Sunday, Iran's official IRNA news agency quoted an Iranian Revolutionary Guard commander as urging Muslim countries to use oil as a weapon to pressure an end to Israel's offensive in Gaza.
Iran's foreign ministry didn't distance itself from Brig. Gen. Mirfaysal Bagherzadeh's comments when asked about them Monday. "We do support any action for realizing two main steps: an immediate stop to the invasion and an end to the Gaza blockade," spokesman Hasan Qashqavi said.
But Bagherzadeh is not among the top oil officials in Iran, OPEC's second-biggest producer, and his suggestions drew no comment from those leaders.
A few days earlier, members of Bahrain's lower house of parliament said Arab states should use oil and the region's huge investment funds to pressure the West over Israel's offensive. That call drew only silence from leaders of the island kingdom, an important American ally and host to the U.S. Navy's 5th Fleet.
Arab oil producers most famously used crude supplies as a weapon during the 1973 Yom Kippur War between Israel and Arab armies led by Egypt and Syria. Their decision to stop shipments to the U.S. and other allies of Israel led to shortages and a steep spike in the price of oil.
But analysts said times have changed.
"We're not in 1973. We've moved beyond that," said Raja Kiwan, a Dubai-based analyst with the consulting firm PFC Energy. "The (Persian) Gulf realizes it's plugged into what's happening in the rest of the world."
The region's leaders are embracing more pragmatic politics increasingly distant from the angry rhetoric of the past. Saudi Foreign Minister Saud al-Faisal, for example, has repeatedly said his country, the world's biggest oil exporter, would not use oil as a weapon.
"There hasn't been, in the history of Saudi Arabia's oil production over the past at least 20 years, any attempt to change the demand-supply equilibrium," said John Sfakianakis, chief economist with SABB, formerly known as Saudi British Bank.
"I don't think that they want to destabilize that, nor do they want to see oil prices go to levels that disturb the ability of the global economy to revive itself," Sfakianakis said.
In large part, the pragmatism stems from a focus on economic development that hinges on careful management of energy resources.
Countries in the region are racing to diversify their economies before oil profits run out, seeking to establish themselves as financial, tourism and commercial hubs with glittering skyscrapers and other attractions.
"Oil resources are for the development of countries," said Abdel Aziz Daghestani, an independent Saudi economist and analyst when asked about the Iranian general's oil-as-weapon proposal.
Despite declining oil revenues from the price slide, Saudi Arabia and some other countries like the United Arab Emirates recently set new budgets that call for ramped-up spending on key services and sectors such as education and health care.
Even the Islamic government in Iran has to tread carefully. It depends on oil revenue for as much as 90 percent of its foreign income and is suffering badly from the price fall.
As a key backer of the militant groups Hamas in Gaza and Hezbollah in Lebanon, Iran also needs money to fuel its proxy fights with Israel and the Arab nations that are ideological opponents, particularly Saudi Arabia.
Halting oil sales to the West would be a severe blow for Iran, analysts say.
"They cannot afford to reduce production," Standard Chartered's Gardiner said.
http://news.yahoo.com/s/ap/20090105/ap_on_re_mi_ea/ml_mideast_oil_weapon
Topic: Calls to use oil as weapon in Gaza fight fall flat (Read 460 times)