The Oil Weapon

Not until the 19th Century, according to "Oil", part 8 of Inside Islam, a History Channel broadcast, was large scale production of oil undertaken in the Middle East _{(Inside Islam 8)}. The investment and development of the infrastructure within oil producing countries meant that their economies began to flourish and international commerce became a major concern. While there began a huge surge in the development of transport dependent on the internal combustion engine, the World quickly became dependent on oil. Because the Middle East sits on top of the World's largest and most accessible oil fields, these countries quickly realized that, potentially, they had great power to influence World affairs. What has become known as the oil weapon (the producing nations' control of oil production and prices), has been used on several occasions since these nations took control of their own production, and often coincided with periods of economic recession. Although the oil weapon has undoubtedly caused some economic effects on the target nations, the political and strategic objectives intended, in the long run, were not realized.

Up until the 1960's virtually all of the oil production of the Middle East was in control of Western companies who kept most of the profits, only around 30% of which went to the nation hosting the wells ₍₈₎. It was the Suez Crisis of 1956, according to the Congressional Quarterly publication, The Middle East, that underlined the importance of oil and acted as the catalyst for the Middle East nations taking control of their oilfields and attempting to impose their will on the World _{(Congressional Quarterly 164)}. A. F. Alhajji, associate professor of economics at the University of Northern Ohio reports in his article, "The Oil Weapon: Past, Present, and Future", that after Egypt nationalized the Suez Canal and thus control its traffic, The UK and France concocted a plan with Israel to justify an invasion which would regain them control of Suez, securing trade routes from the far East. Even though Saudi Arabia then imposed an oil embargo on the UK and France, the decrease in output was only by about 2 million barrels per day which was less than the world's excess production capacity. It was, therefore, no problem for the UK and France to simply import oil from the USA, Venezuela, and Indonesia _(Alhajji).

The next notable use of the oil weapon by Middle Eastern producers was during the 1967 Six Day War between Israel and Arab neighbors Egypt, Jordan, and Syria. Attempting to coerce the Western nations away from their support of Israel, several Arab states imposed an embargo. However, two of the major oil producing states, Saudi Arabia, and Kuwait, did not join the embargo due to the potential loss in revenue they faced and because they did not want to upset a West who could offer a "counterweight" to Soviet Communist influence in the region. An embargo without two major producers proved futile as the target nations continued to get their oil and continued in their support of Israel. The Western nations suffered very little from the embargo and, even though there was a slight increase in the price of oil, this was probably more an effect of the closure of the Suez canal _(Alhajji).

A similar scenario began during the October 1973 (Yom Kippur) war when some Arab oil producing nations imposed an embargo on the USA and the Netherlands for their support of Israel. This time, the stated political objective was to put pressure on the international community to apply and enforce United Nations resolution 242 calling for Israel to withdraw to its 1967 borders _(Alhajji). The embargo escalated when Saudi Arabia announced a cut in production of 10% and its intention to cease oil shipments to the USA if it continued to support Israel with weaponry. President Nixon's response was to get approval from congress for $2.2 billion in emergency aid for Israel and the Saudis' counter-response was to cut oil production by 25% and totally cut the USA out of any shipments. When most of the other Arab nations followed the Saudi example, oil prices climbed up to $20 per barrel, as compared to the OPEC posted price of $11.65 _{(CQ 164)}.

This time the embargo met its objective somewhat when a European Economic Community (EEC) meeting in Brussels decided to try and influence Israel to comply with resolution 242, withdrawing from lands captured in the 1967 war and respecting the rights of Palestinians ₍₁₆₅₎. Furthermore, Roy Licklider, professor of Political Science at Rutgers University, points out in his article, "The Power of Oil: The Arab Oil Weapon and the Netherlands, the United Kingdom, Canada, Japan, and the United States", that not only did the UK refuse to give any of her oil to the Netherlands, but also many European countries refused the USA use of their military bases for rearming Israel _(Licklider). Alhajji argues, however, that the economic effects were due to multiple other causes like the embargo occurring just before the winter, during a time of decreased US oil production, during an oil tanker shortage, when popular thought was that the World was running out of oil, stockpiling, and Nixon's implementation of price controls. In any case, the embargo was followed by some short term political objectives being met and an increase in the wealth of the Middle East oil producers. Clearly, these effects were not lasting as, to this day, the USA and most of Europe still support Israel _(Alhajji).

The oil weapon has not just been a tool of the Arab states but also of the USA against the Arab states. Indeed, the USA has actually used the oil weapon the most, imposing embargoes on Japan before the Second World War, on the Soviet Union in the 1960s, and on various other occasions and targets over the last 20 years _(Alhajji). In May of 1995, for example, President Clinton put a trade embargo on Iran for sponsoring terrorism and seeking nuclear weapons _{(CQ 187)}. Again, long-term, this was obviously not effective as it is again strongly believed that Iran still sponsors terrorists and is still seeking a nuclear weapon. Because the Arab oil producers depend almost exclusively on their oil revenue, more than the USA depends on their oil, an embargo imposed on the Arab oil producer is also considered an oil weapon _(Alhajji). An example suggested by R. James Woolsey, former director of the CIA, in his article "Defeating the Oil Weapon", is the use of US strategic oil reserves which could be sold in order to purchase futures of oil priced below the current market price. Because the Saudis have been running a deficit for years bolstering their social programs and improving infrastructures, they would be affected by use of such a measure _(Woolsey).

The Western consumer nations are still vulnerable to the oil weapon due to their dependence and relatively low levels of domestic oil production. The Arab nations are motivated to use such measures because the USA, while possessing only 3% of known oil, consume around 25% of the World's total production. Saudi Arabia in particular has enormous power because they have what is known as the "swing capacity" of 3 million barrels per day by which they can increase their production. This would be enough to fill a gap in the market during a crisis. At the same time, the West's weakness is that it cannot decrease oil dependence in the near future due to time constraints in exploration, economic constraints in extraction, and the basic fact that it will always be cheaper for the West to buy Middle East oil than it will be to produce its own. The most immediate hope for diluting Middle Eastern control over the oil market would be to invest in development of Russian oil production infrastructure _(Woolsey). Indeed, Jeffrey E Garten of the Yale School of Management estimates that Russian oil output could be increased by at least 3.4 million barrels per day _{(qtd. in Woolsey)}.

The West does not need to leave itself so susceptible to the oil weapon writes Richard Miniter, environmental-policy analyst at the Competitive Enterprise Institute, in his article "The Oil Shortage That Wasn't". France, for example, leads the way in terms of having low dependence on oil with an energy consumption which is 80% nuclear; they even export excess electricity to other countries. After the fixed costs of setting up the infrastructure, their cost of energy production equates to approximately $4 per barrel in oil terms _(Miniter). An alternative solution, perhaps more acceptable in the USA, is the development of waste to fuel gasoline thirsty vehicles. Lee Lynd of the Thayer School of Engineering at Dartmouth estimates that about half of the unused prairie grass in the USA could be converted into enough ethanol to fulfill one quarter of total gasoline needs at today's mileages _{(qtd. in Woolsey)}. Furthermore, simply converted vehicles of the type already populating the roads of Brazil which would normally attain around 20 miles per gallon would, with an 85% ethanol mixture, get closer to 100 miles per gallon _(Woolsey).

The future can include a West whose nations can no longer be held hostage or blackmailed into policies against their individual national interests. An issue could no longer be made out of a nation's strength or integrity and leaders would not face such dilemmas of either backing down to Arab nations' demands and committing political suicide, or alienating a people who may suffer economic hardships. All it would take is a strong leader willing to go by what he says and actually greatly decrease US dependence on foreign oil.

Alhajji, A. F. "The Oil Weapon: Past, Present, and Future." Oil & Gas Journal. 103, no 73. May 2 2005.

Congressional Quarterly. The Middle East. Washington: CQ press, 2000.

Inside Islam. Dir. Mark Hufnail. The History Channel. 11 Sept. 2002.

Licklider, Roy. "The Power of Oil: The Arab Oil Weapon and the Netherlands, the United Kingdom, Canada, Japan, and the United States." International Studies Quarterly. 32, no 2. Jun 1988.

Miniter, Richard. "The Oil Shortage That Wasn't." National Review. 43, Apr 15 1991. 36-38. 

Woolsey, R. James. "Defeating the Oil Weapon." Commentary. 114. no 2. (Summer 2002). 29-33.