The panic attack in the crude oil market must have lit up Sleepy Joe’s phone with frantic calls from the Treasury as well as the Pentagon. The sudden spike unravelled record hedge fund bearish bets on oil and triggered a dramatic short squeeze, embarrassing pundits who had spent the last year dismissing oil’s classic relevance as a Middle East risk indicator in the new world where “too much, not too little oil is the real crisis”.
You can bet that that got Kamala wondering if letting Israel hit Iran’s oil infrastructure — since it’s Bibi’s turn now in this tit-for-tat – is really smart. Sure, it would deliver the ayatollahs a savage blow, but it would also cause another spasm in the market and draw speculators whom Bloomberg so unfairly dismissed as “oil market tourists” the other day, possibly creating a bubble.
That would inevitably mean higher prices at the pump just when American voters decide one of the most controversial elections in their history, that too when the highest inflation rate in 40 years is subsiding and interest rates are finally dropping. It’ll get much worse if Iran mines or blocks the Strait of Hormuz when it is its turn. And even if the reality of American bombs fired from Israeli planes and tanks killing thousands of people does not force the US public to hold their leaders accountable, expensive fuel does it so savagely that it is quite the cliché in financial markets.
Yet Israel will definitely hit something inside Iran, and hit hard. It’s also not sharing its plans with Washington, and American frustration has started leaking into the press (everybody knows when that happens). The Wall Street Journal reported on Wednesday that “Israel has so far refused to divulge to the Biden administration details of its plans to retaliate against Tehran, the US officials say, even as the White House is urging its closest Middle East ally not to hit Iran’s oil facilities or nuclear sites amid fears of a widening regional war.”
It went on to say that US Defence Secretary Lloyd Austin, fed up with being kept in the dark and then forced to defend Israel’s positions, asked Israeli Defence Minister Yoav Gallant if Israel was prepared to be “alone” in this war. This was after the Americans were not informed about the plan to assassinate Hassan Nasrallah, even though Netanyahu gave the order from New York.
Israel’s brutal degradation of Hamas and its wholesale decapitation of Hezbollah’s high command have been its biggest prizes of this war. But it’s still well short of its original war aims of completely dismantling the resistance and bringing the hostages home; or the new aim of making the Galilee, the north that borders Lebanon, livable again.
It’s been able to do all this, and let the demons of death loose on innocent Palestinians and Lebanese, because of the blank cheque from Uncle Sam. And now that it’s managed to directly drag Iran into the war, it will also need direct US involvement. But Bibi’s war plans – which find support in his right-wing cabinet but increasing opposition in the rest of the country – are now becoming a drag on domestic US politics as well.
That’s got to rattle the Democrats; why else would they spill the frustration to the press? Genocide Joe would no doubt look forward to going back to sleep after November, but Kamala would not be happy about exploding fuel prices at election time just because Bibi didn’t listen even when the US was backing his genocide lock, stock and barrel.
The Europeans are also unhappy. Annual inflation in the euro zone is now 1.8pc, below the European Central Bank’s 2pc target for the first time in more than three years, hence the cut in rates in lock step with the Fed. But high oil makes everything expensive. “There’s barely any corner of the economy that oil doesn’t reach. It heats homes and businesses, powers factories and every means of transport, and is a key input in the production of chemicals, plastics, materials and all manner of goods”, according to Reuters columnist Jamie McGeever. So when oil goes up, everything else does too.
President Macron of France finally spoke out against selling arms to Israel and got the expected “shame on you” rant from Netanyahu. Yet European media is overflowing with their leaders’ shock as Israeli tactics and its disregard for international law. And now that its actions risk making life more expensive for ordinary people everywhere in the world, and more leaders speak out, will Bibi answer them all in the same tone?
The clock ticks to Israel’s reply. Nobody expects it to be soft. But will it also be hard for the Americans? Especially what people pay at the pump and the counter and the price top politicians will pay to continue the blind support for the Jewish state?