Gaza ceasefire eases oil prices

The Oil price has been raised briefly on fears of heightened tension in the Middle East following Israel’s offensive attacks on the Gaza Strip while after the cease-fire edged the prices lower

Oil climbed to a three-week high in trading last month, on the back of fears of a potential oil boycott following an escalation of violence in the Middle East. Israel’s bloody aggressiveness in the hapless Gaza Strip region encouraged an Iranian military commander to lead calls for an oil boycott on supplies to the warring nation. The news came on the back of thousands of Israeli troops crossing the border capturing bases that Hamas militants has used to launch missile attacks against their neighbors.

A source from the Organization of Petroleum Exporting Countries (OPEC), of which Iran is a member nation, responded by claiming that the Iranian call would be unlikely to sway other member nations round to their way of thinking. Particularly as OPEC’s most influential member, Saudi Arabia, and neighboring Kuwait, Qatar, and the United Arab Emirates (UAE) are all regional allies to the U.S.

Iran, who is the world’s fourth largest producer of oil, has a track record of rallying against the interests of Israel, and is primary financial backer: the United States.
In total oil prices have rocketed by more than 25 percent since Israel began its assault upon the Gaza Strip on December 27, 2008, a stark comparison with the 27 percent price tumble seen in the week prior to the attacks.

The Middle East accounts for around one third of the entire world’s oil production. Back in July 2006, prices climbed to a then record $78.60 a barrel following Israeli attacks upon Iranian-backed Hezbollah forces in Lebanon. Gerard Burg, energy and minerals economist at the National Australia Bank astutely noted that prices in both instances were being driven by “the worst case scenario.”

Oil prices have proven once again to embody the up-to-the-minute geopolitical tensions in oil producing regions the world over.
On the other hand, the military invasion of the Gaza Strip by Israeli Forces bears a direct relation to the control and ownership of strategic offshore gas reserves. This is a war of conquest. Discovered in 2000, there are extensive gas reserves off the Gaza coastline. 

British Gas (BG Group) and its partner, the Athens based Consolidated Contractors International Company (CCC) owned by Lebanon’s Sabbagh and Koury families were granted oil and gas exploration rights in a 25 year agreement signed in November 1999 with the Palestinian Authority.
The rights to the offshore gas field are respectively BG (60 percent); Consolidated Contractors CCC (30 percent); and the Investment Fund of the Palestinian Authority (10 percent). (Haaretz, October 21, 2007). 

The BG Group drilled two wells in 2000: Gaza Marine-1 and Gaza Marine-2. Reserves are estimated by BG to be of the order of 1.4 trillion cubic feet, valued at approximately four billion dollars. These are the figures made public by British Gas. The size of Palestine’s gas reserves could be much larger.
The issue of sovereignty over Gaza’s gas fields is crucial. From a legal standpoint, the gas reserves belong to Palestine. However, the death of former Palestinian President Yasser Arafat, the election of the Hamas government and the ruin of the Palestinian Authority have enabled Israel to spread their control over Gaza’s offshore gas reserves. 

Israel’s intent was to foreclose the possibility that royalties be paid to the Palestinians. In December 2007, BG Group withdrew from negotiations with the Israeli Government for the sale of gas from the Gaza Marine field to Israel. In January 2008, BG Group closed its office in Israel.
Moreover, the invasion plan of the Gaza Strip under “Operation Cast Lead” was set in motion in June 2008, according to Israeli military sources. The Israeli authorities contacted British Gas, with a view to resuming crucial negotiations pertaining to the purchase of Gaza’s natural gas.
The decision to speed up negotiations with BG coincided, chronologically, with the planning of the invasion of Gaza initiated in June. It would appear that Israel was anxious to reach an agreement with the BG Group prior to the invasion, which was already in an advanced planning stage.
In addition, these negotiations with British Gas were conducted by the Ehud Olmert government with the knowledge that a military invasion was on the drawing board. In all likelihood, a new “post war” political-territorial arrangement for the Gaza strip was also being contemplated by the Israeli government.
In fact, negotiations between British Gas and Israeli officials were ongoing in October 2008, 2-3 months prior to the commencement of the bombings on December 27th.  

Despite the cease-fire, Israeli Prime Minister Ehud Olmert said the truce would be fragile and could be short-lived. Besides, he said Israel would abide by the ceasefire, but its armed forces were ready to act if cross-border rocket attacks continued.
While Hamas’s leader in Gaza, Ismail Haniya, said the truce would “bring stability to Israel if they commit themselves to it”.

By Ahmed Morsy


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