Newsweek: The War Premium On Oil

There are two questions being asked around the global water cooler these days, and no one seems to have a very good answer for them. First, why does the price of oil keep rising, even if the world economy is slowing down and the Saudis appear to be willing to raise production? Second, why do so many analysts and governments think that the United States or Israel, or both, will attempt to destroy or set back the Iranian nuclear program sometime before George W. Bush's departure from the White House early next year? While there is a early infinite number of answers available to both of these questions, this writer likes one: it lies in the link between the two questions. Obviously there is no single explanation for the astonishing and persistent rise in oil prices, recently hitting more than $140 per barrel. But one explanation may well be that energy traders and even real consumers, including refiners, companies and governments, are betting on an American-Israeli intervention against Iran in the near future, and logically believing that such an act would drive oil prices sky-high. While the American, Israeli and increasingly European attitude of turning up pressure, sanctions and threats against Tehran may well be the best way to both avoid military action and ensure that Iran does not acquire nuclear weapons, it has the unintended consequence that some people may actually believe it. Speculators and others may be acting on the assumption that Washington and its Israeli ally will proceed to 'take out' Iranian nuclear facilities, because that is exactly what Bush and his allies are implying will happen if the Ahmadinejad regime does not comply with U.N. resolutions.