Minister’s threat of Iran attack ‘sends oil price soaring’

A weekend newspaper interview with Israel’s Transportation Minister, Shaul Mofaz, who threatened Iran with military action, has been deemed a major cause of the latest spike in oil prices.

Mr Mofaz’s threats coincided with the unofficial start of his Kadima leadership primaries campaign, but its reverberations were felt much further afield than Israel’s political scene.

The former Defence Minister’s interview appeared in Yediot Ahronot’s Shavuot edition, but was trailed the previous Friday. The most explosive quote was that a military option against Iran was “becoming more imminent”.

“If Iran carries on with its programme to develop nuclear weapons,” said Mr Mofaz. “We will attack them. The window of opportunity has closed. The sanctions are not effective. There will be no recourse but to attack Iran to stop its nuclear programme.”

Following the publication of this quote on Friday morning, oil — which on Wednesday night had been $122.3 (£62) a barrel, and had started going up slowly on Thursday due to the weak US currency, rocketed in a few hours to $139.1, levelling off at $138.5 (£70) by the end of the day.

“It would seem that his statement contributed greatly to the price rise,” Amit Mor, CEO of Eco Energy, an Israeli consultancy company, said.  “Though there were also other contributing factors,” such as the weak dollar and the Morgan Stanley forecast that a barrel of oil might reach $150 (£77) by the end of the month.

Mr Mofaz has been scrambling over the past week to try to close the opinion-poll lead of his main Kadima leadership rival, Foreign Minister
Tzipi Livni.

But he denied that the interview, which took place on the Golan Heights, was for political purposes. He also attacked the latest reports that Israel has already agreed to cede the Heights in a peace deal with Syria, called for the assassination of Hamas leaders and predicted that there “will not be an agreement with the Palestinians in 2008 or in 2009”.

Mr Mofaz is unofficially vying to replace Prime Minister Ehud Olmert, whose premiership is not expected to last much longer, due to the police
investigation into alleged bribe-taking gathering pace. A date for the primaries has yet to be set.

Mr Olmert also tried to use the Iranian card, when aides leaked to the Israeli media during his visit to Washington last week that he was having serious talks with President Bush on the need to stop Iran.

One senior Israeli diplomat recalled this week Henry Kissinger’s comment that “there is no foreign policy, only domestic policy”, and told the JC: “This seems to be what is guiding Israel’s leaders, when it would best be to say as little as possible about the Iranian issue.”

    Last updated: 2:50pm, August 18 2009