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Israeli threat to Iran spurs oil prices

PHOTO: AP

TEMPTING OFFER: An electric car sales shop in Portland, Oregon, on Saturday.

DUBAI: The Israeli Transport Minister’s threat that a military attack on Iran could become inevitable has pushed oil prices to record levels.

Oil prices breached the $139 a barrel mark after Transport Minister Shaul Mofaz said on Friday an attack on Iran was “unavoidable” as sanctions had failed to prevent Tehran from developing its nuclear capability.

Analysts point out that Mr. Mofaz’s remarks came at a time when the slump in the value of the dollar was already spiralling oil prices. The fall of the dollar triggered a hike in the price of oil, gold and other commodities that are traded in the U.S. currency.

In an interview with Israeli daily Yedioth Ahronoth, Mr. Mofaz, a former defence forces chief, said “if Iran continues with its programme for developing nuclear weapons, we will attack it. The sanctions are ineffective.”

Referring to Iranian President Mahmoud Ahmadinejad’s earlier remarks on Israel being wiped off the map, Mr. Mofaz warned that, instead, Iran “would disappear before Israel does.”

The surge in oil prices has led to a meeting in Japan of Energy Minister’s of G-8 countries. India, China and South Korea are also being represented at this meeting. The two-day conference at the northern Japanese city of Aomori is expected to conclude that rising prices are “against the interest of both consuming and producing countries.” It would, however, call for a “phased and gradual” withdrawal of price subsidies.

There is an argument that the growing demand of oil in India and China is at the heart of rising oil prices. However, observers point out that geopolitical threats, market speculation, and unreliable information on the quantum of global energy reserves are major factors leading to surging oil prices.

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