A nervous oil market has quickly passed by the only hint so far of its worst nightmare.
With Palestinians and Israelis killing one another in the Middle East, a 27-year-old specter lurks in the minds of traders: When war erupted Israel in 1973, Arab oil exporters cut shipments to the US and Netherlands.
It is only prudent, therefore, in a market with thinner than normal cushions of inventories and spare production capacity, to fret about the possibility of a new embargo.
The 1973 disruption quadrupled the price of crude, restructured energy markets, and inaugurated an era of rapid nation-building around the Persian Gulf. It also created enduring animosity within the industrialized world toward the use of oil to influence international politics.
So the question looms: Will exporters sympathetic to the Palestinian side of the conflict in Israel again deploy oil as a political weapon?
Provocation in that direction surfaced recently from Iran, a non-Arab exporting country with a complex political agenda of its own.
Iranian Defense Minister Ali Shamkhani on Oct. 17 urged Islamic countries to use "production and sale of oil" to support Palestinians and resist the Middle East peace process.
Futures prices of crude oil jumped on news of his statement but soon fell back.
Shamkhani, who comes from Iran's predominantly Arab Khuzestan province, received no overt support from Arab governments.
In fact, those governments so far have acted much less willing to sacrifice oil sales to the Palestinian cause than they were in 1973. They have good reasons to hold that position.
A politically inspired production cut would cost them money, market share, and goodwill with important customers and allies-the US foremost among them. And Arab governments haven't forgotten that Palestinian Leader Yasser Arafat sided with Iraqi President Saddam Hussein when Iraq invaded Kuwait in 1990.
The probability is therefore lower now than it was in 1973 that exporters will use oil as a political weapon.
It would be lower still if consuming countries-the US foremost among them-hadn't validated the practice through the serial imposition of trade sanctions covering oil. On the lengthy list of US sanction targets, of course, Iran holds a prominent position.
Within that context, Shamkhani's go-nowhere bluster makes a telling point.
