Iran Calls For Middle East States to Start Economic Escalation Via Oil Embargo On Israel

Yves here. This gambit by Iran, that of proposing an oil embargo against Israel, has the potential to be more significant that it appears by getting Middle East states to unite fornally in an economic campaign against Israel. The article below explains that Israel does not import much oil, so the immediate impact would be limited.

But in a sense, that is the point. Once Arab (and Persian Iran) act together, even on a largely symbolic initiative, that greases the skids for more consequential action. The Saudis might tolerate or even welcome Iran being out in front, since that will be a smidge less confrontational with the US. And once a first agreement is worked out, it might be possible to handle any future efforts on a more collaborative basis.

Given the impact of the 1970s oil embargo, going after the US would seem to be a logical next step if the Biden Administration fails to get Israel to stop its ethnic cleansing of Gaza. But US is a net petroleum exporter. Per the EIA, its biggest import sources are Canada at 52% and Mexico at 10%, with Saudi Arabia and Iraq together providing 11%. Would the GulF States portion being denied to the US make much difference to us? My guess is it could affect certain grades and products, but not too much overall.

Another possible choke point is LNG. Reader Will caught this item in a recent Gilbert Doctorow post:

…if the Europeans persist in giving unqualified support to Israel for its pending land invasion of Gaza then the emirate will halt all further deliveries of natural gas to Europe.

So Qatar has already thrown down the gauntlet. Qater is one of the 15 biggest oil exporters and likely to join the Iran scheme if it gets traction. Qatar was the biggest LNG exporter in 2022, but the US is #1 so far in 2023 after Freeport LNG came back online following a fire.

The US might not be all that unhappy with Europe losing LNG supplies, since the US would try to fill the gap, at of course shortage-induced higher prices. But then we have other possible damage to the US bloc.

Given that the US and Europe have stripped their weapons cupboards pretty bare with Project Ukraine, the US might lean on South Korean and Japan for help. The threat of an LNG ban could have a deterrent effect. From Statista:

By Tsvetana Paraskova, a writer for with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at OilPrice

  • Iran has called for a complete and immediate oil embargo on Israel as air strikes on the Gaza Strip continue.
  • The calls came hours after a blast at a hospital in Gaza killed a reported 500 people, with both sides blaming each other for the blast.
  • Oil prices climbed on Wednesday morning as rising tensions in the Middle East threaten supply.

Iran is calling for an oil embargo on Israel over the latest deadly air strikes on the Gaza Strip amid growing tensions in the Middle East just as U.S. President Joe Biden arrived in Israel.

Iran wants “an immediate and complete embargo on the Zionist regime by Islamic countries, an oil embargo against the regime,” according to a statement from the foreign ministry on Telegram quoted by Bloomberg.

Iran’s Foreign Minister Hossein Amirabdollahian has also called for Muslim countries to expel their respective Israeli ambassadors if they have diplomatic relations with Israel.

Amirabdollahian warned, “If the war crimes do not stop and the ongoing genocide by the apartheid Zionist regime in Gaza continues, the situation in the region will spiral out of control”.

Amirabdollahian met with his Kuwaiti counterpart on the sidelines of an extraordinary meeting of the Organization of Islamic Cooperation (OIC)’s Executive Committee in Jeddah, Saudi Arabia.

The emergency meeting is taking place hours after a missile strike on a hospital in Gaza killed about 500 people, with Israel’s army and Hamas blaming each other for the attack, which sent oil prices jumping by more than 2% early on Wednesday.

Meanwhile, U.S. President Biden arrived in Israel on Wednesday to discuss the conflict. Following the bombing of the hospital, a meeting of Arab leaders and Biden in Jordan was canceled. Biden claimed that, from what he has seen, the explosion at the hospital was not carried out by Israel but by “the other team”.

Israel is a small oil importer, but the further escalation of the Hamas-Israel war into the wider Middle East is not being ruled out, and analysts are increasingly concerned about supply from the world’s most important oil-exporting region.

With Saudi Arabia also taking a pro-Palestine stance in its recent conversations with the U.S., the possibility for a quick end of the fighting is fading away while the possibility of greater regional involvement appears to be rising if oil prices are any indication.

Print Friendly, PDF & Email


  1. The Rev Kev

    As of 2021 ‘Israel imports Crude Petroleum primarily from: Azerbaijan ($888M), United States ($197M), Brazil ($134M), Nigeria ($86.7M), and Angola ($57.9M)’

    That may not be the full picture however as I believe that Israel has been getting a lot of stolen Syrian oil via Turkiye in the past. Don’t know if it is still true or not but I note that yesterday Israel told all their citizens in Turkiye to get out. So, no oil will come from that direction and maybe not via the Suez canal if Egypt knocks them back.

    1. hk

      The extent of Azerbaijani oil in Israel is particularly fascinating given the current goings in the Caucasus. Pashinian chose a bad time to stir up trouble, it seems.

      1. Piotr Berman

        I think a part of Azeri oil export is piped through Turkey, and Turkey has influence over Azeris. Erdogan had a big pro-Palestinian mouth, but very soft had with Israel. Time will tell.

  2. ddt

    “So Qatar has already thrown down the gauntlet. Qater is one of the 15 biggest oil exporters and likely to join the Iran scheme if it gets traction. Qatar was the biggest LNG exporter in 2022, but the US is #1 so far in 2023 after Freeport LNG came back online following a fire.”

    Qatar ruler, according to APNews and Reuters Qatar refuses to politicise their LNG exports and have just set up decade long deals with France and the Netherlands. So not sure where this info regarding stopping exports to western countries is coming from. Where’s the claim that Qatar would withhold exports coming from?

    1. Rip Van Winkle

      I would be very interested in the total (various lines) insurance cost for 1 LNG shipment to Europe from U.S.

    2. Van Res

      The news about Qatary position came from regular Russian Media Coverage, by Gilbert Doctorow, who wrote three days ago:

      ” I note that Russian news programs yesterday and today have broadcast a considerable amount of information that you should know to better understand our chances of surviving the Middle East conflict but will not hear about in major Western media.

      For example, the arrival in Berlin of the Qatari emir for talks with Chancellor Scholz on Thursday was indeed mentioned in our media. The content of their talks was not. However, per Russian news the [qatary] emir told Scholz openly that if the Europeans persist in giving unqualified support to Israel for its pending land invasion of Gaza then the emirate will halt all further deliveries of natural gas to Europe. It bears mention that Qatar accounts for 13% of global LNG sales and its planned deliveries to Europe are critical for the Old Continent to maintain energy security this winter under conditions of the sanctions applied to the traditional supplier, Russia.”,traditional%20supplier%2C%20Russia.

  3. Louis Fyne

    Just as in Ukraine, the non-US party has 100% “escalation dominance”…the ability to raise stakes, bluff, call bluffs.

    DC is just all for the ride now….especially seeing Biden in action with Bibi.

    last week’s 60 Minutes interview with Biden in which Biden fetes American hyper-dominance may prove prophetic for all the wrong reasons.

  4. David in Friday Harbor

    The significance of the settler occupation of Al-Aqsa and Jerusalem in potentially uniting the Islamic Ummah should not be underestimated. The phony double-standards of the hegemon’s “Rules-based Order” are the Emperor’s New Clothes to peoples who despite their historical differences are united under Sharia.

    The U.S. may be a net oil exporter, but an embargo will bring down governments in Europe, potentially throwing NATO and the UN Security Council into disarray.

    Then China (and India) will be free to act through BRICS or the UN to strategically clamp down on exports of both raw materials and manufactured goods. This will contribute to further instability in the U.S.

    1. Yves Smith Post author

      This is a straw man and comes off like spin to try to calm Mr. Market.

      Iran was not addressing OPEC and was not calling for any action by OPEC. Iran would have no standing to seek action from OPEC. Iran was addressing Middle East states.

      OPEC includes Nigeria, Venezuela, Congo and Angola. None are Middle East states.

      Qatar was a member but withdrew in 2019. It would clearly be part of this group that Iran envisages.

      Mind you, I clearly indicated that the Iran plan might not get off the ground, but this Reuters story is intended to mislead.

    1. Louis Fyne

      a) 1st step of escalation, with many higher rungs available.

      b) show their people that their government/their Establishment are not closet pro-Israeli ostriches with their heads in the proverbial sand

  5. Lex

    If only against Israel it’s largely but deeply symbolic. If it extends to countries which support Israel it has teeth. Probably less in physical supply than in the markets. My question would be if there’s a repeat of the 1970’s, does the US as net exporter have the ability to be self-sufficient? And in the event of market turmoil would Biden step in with price controls?

    It’s one thing to export petroleum but another to have the refining capability to supply all the necessary gasoline and diesel for the US to function. The same goes for markets pushing prices to double at the pump. One would hope that the Biden admin has contingency plans in place to act on these sorts of events; one also has to suspect that they do not.

      1. John k

        This is overdue, tho I hadn’t heard. They have world’s largest resource, but quite heavy and requires specialized ops.
        Venezuelan heavy oil is good for producing diesel which, is in short supply in us because fracked oil is basically condensate, or very light. Before we finally cut off Russian imports we were getting diesel from them while exporting lighter grades.
        But imo their fields are in crappy shape, it will take time to get back to where they were before we began the embargo, and us majors or other experienced players are likely to be needed to set up long dormant ops.

    1. ISL

      US has been reducing refining capacity significantly over the last few decades, while petroleum use has increased. I am unaware of a strategic reserve of refined products. Please correct me if I am wrong. Also, US oil is wrong for diesel. Most of that used to come from Russia and Venezuela (which will not export for many years due to the sanctions damage to its oil industry) and south caucus’s. Since the military (and farms) runs on diesel, this is a critical weakness.

      1. nippersdad

        One might add that virtually our entire transport network runs on diesel. Never mind getting the trucks and railroads to run on time, getting them to run at all without diesel would be a hopeless task.

      2. StevRev

        The US has never imported significant amounts of crude from Russia. And Venezuelan oil has (for the most part) been replaced by Canadian heavy from the oil sands. WTI is perfectly fine for making diesel.

        1. John k

          But fracked oil isn’t, and imo that has replaced a lot of our declining wti.
          As I recall, we were importing nearly 1mmb/d diesel from Russia going into the SMO, and continued imports for months after pressuring eu to stop. And since then we’ve made on-off overtures to Venezuela to get started again. Another commentator above thinks we’ve reached a deal to restart, but even if so imo might take a year before any of it flows here.

          1. StevRev

            The highest imports from Russia were 415,000 bpd in June 2010. Just prior to the SMO, it fluctuated a bit year-to-year but was down to 200,000 bpd, or about 1% of US refining capacity.

            75% of US production is < 45 API, 90% is below 50 API. The inherent yield of the lighter grades is about 30% distillate (jet/diesel/kerosine), sufficient for US demand (4 MM bpd) when combined with the heavier grades that are produced.

    2. Acacia

      If it extends to other countries that support Israel, that would include Japan, the largest LNG importer in the world. Australia, Malaysia, Qatar, Russia and Indonesia have been Japan’s major sources for LNG.

      I gather Japan already lost Russia by refusing to pay in roubles (which neighboring South Korea agreed to do), but Russia was only supplying 9%. Now, if Malaysia, Qatar, and Indonesia all joined a forthcoming ban led by Iran — and Malaysia and Indonesia are also majority Muslim — Japan could find itself in a rather difficult position.

      The US does supply LNG to Japan, but at the #10 largest source it’s really not very much. Is the US going to make up for the loss of all those other sources? I don’t see it.

  6. Ghost in the Machine

    I think you meant the US is a net importer. The US consumes between 19-20 million barrels a day and produces a little over 13 million barrels a day. Which is a lot. The US exports some but imports about 7 million barrels a day net. A lot of finished oil products like gasoline are exported which the US profits from.

    1. Ghost in the Machine

      Even so, we are much much better off energy wise than Europe. Other than oil we produce our own energy: natural gas, coal, etc. and we waste a lot of oil on frivolous stuff. We could belt tighten a lot without harming core industries like food production and distribution. Of course jobs depend on that frivolous consumption

      1. John k

        We tightened belt in 70’s. Rough time for economy, especially those driving big truck to grocery store.
        Our oil reserve is full just now, right?

    2. ilsm

      US net importer of crude. Source in Canada and Mexico. Add Venezuela heavy crude for distillate yield.

      Since the Feb 2022 sanctions US somewhat reduced crude imports, release from Strat Petrol Reserve helped this, and permitted US to be net exporter of finished fuels.

      US net export much higher since Feb 2022.

      If OPEC hold back, US has crude but prices will go up.

      Or US stop export fuel.

    3. vao

      The USA became a net oil exporter in 2020. Before that, it was a net oil importer — at least according to the EIA statistics.

      National production took off in 2008 after a long period of decline — most probably a consequence of shale oil extraction. Given the characteristics of that kind of crude source, I wonder whether the USA will keep their position as a net oil exporter for long.

    4. Yves Smith Post author

      No, you have your facts wrong. Please use a search engine rather than make me waste time debunking you. The post clearly stated, “But US is a net petroleum exporter”:

      The US will remain a net exporter of petroleum products through 2050, according to the 2023 Annual Energy Outlook (AEO2023) from the US Energy Information Administration. EIA. Petroleum products net exports/Gross crude oil imports

      The United States has become a global crude oil exporting power over the last few years, but exports have not exceeded its imports since World War II. That could change next year.

      Sales of U.S. crude to other nations are now a record 3.4 million barrels per day (bpd), with exports of about 3 million bpd of refined products like gasoline and diesel fuel. The United States is also the leading liquefied natural gas (LNG) exporter, where growth is expected to soar in coming years.

  7. polsini

    Apologies to Yves, you explained very well as always. Too fast comment was meant to be only on David in F.. “embargo will bring down governments in Europe”.

  8. Samuel Conner

    The thought occurs that a possible less confrontational form (sort of “twisting the knife”, but with smile) of wider economic escalation would be a coordinated price increase, with the excess revenue pledged to relief and development for the populations affected by the long-standing failure to implement UN resolutions related to the establishment of the two-state solution.

  9. JonnyJames

    (I think there is a typo in the first para, I think it’s supposed to be “formally”, also a typo further down: Qater)

    It will be interesting to see how far this goes, are the public statements of Qatar, KSA etc. just lip-service, or will there be any real action? Qatar says if the Israelis launch a full-scale ground invasion, then the nat. gas embargo will commence.

    “…The US might not be all that unhappy with Europe losing LNG supplies, since the US would try to fill the gap, at of course shortage-induced higher prices. But then we have other possible damage to the US bloc…” This is an important point, given the destruction of NordSteam pipelines and damage/reduced flow of others. This would make much of Europe even more dependent on US LNG and rising prices would likely accelerate the de-industrialization of Germany. .

    JB, of course, parrots the IDF’s line, and blamed the bombing on the victims. Israel warned to evacuate the hospital (which they know is not possible) then bombed them. That’s how it looks from here, at least. Israel has a long track record of bombing UN buildings, civilian infrastructure, ambulances, hospitals, journalists, etc.

    With Ukraine and Gaza going on at the same time, threats of escalation, embargoes etc. it’s hard to remain unemotional and maintain a cool rationality – especially when one realizes the US govt. is largely to blame for all of it. Feelings of rage, sadness, helplessness etc. are hard to supress, but that’s nothing compared to the suffering of victims.

  10. NYMutza

    The rules based order does not permit an oil embargo on Israel. That would be considered an act of war by the United States and its vassal states. Only the United States has the privilege of sanctioning and embargoing nations. All other nations must follow the rules based order, or face the wrath of Lindsey Graham.

  11. Altandmain

    If the Islamic world does restrict exports to the nations supporting Israel, it will be a bigger challenge than it may initially seem.

    Keep in mind that the Biden regime also emptied about half of the US Strategic Petroleum Reserve. That means that the Islamic world has a lot more leverage over the US as well.

    The issue is not that there will be no oil, whcih of course is not going to happen, as much as it is the issue is that the US is going to have to pay more for the oil. That may make the CEOs and Shareholders of companies like ExxonMobil very happy, but for domestic electoral politics, that is going to have big implications.

    After all, Biden released half of the US SPR to begin with in 2022 for his midterm election prospects. Now he has a smaller SPR to work with for his 2024 election.

    Similarly, in regards to the US and manufacturing, the Biden regime has been working hard to try to get some degree of reshoring. That will be much harder to get if US energy goes up relative to the rest of the world.

    Prices for food, already a source for deep political discontent will rise again. So too will the price for gas and transportation. It is possible that the US Federal Reserve might raise interest rates even more in a desperate bid to stop inflation. It could even result in levels not seem since Paul Volcker. It won’t work of course, but based on their actions in the past could of years, that’s what they will do.

    This isn’t even beginning to address that there will be greedy corporations trying to make the most of this, and like the pandemic, there will be a new wave of Greedflation.

    It will be much tougher than the article implies.

  12. John k

    I see it as symbolic but greasing the skids to expand to include nato countries, and the longer Gaza gets squeezed the easier to expand. It will hardly be lost on the Arabs that us carriers are trying to enforce the blockade and maybe join in the fight, and that nato leaders are all in, too, and even sending navy ships. Or that Russia is on the Palestinian side and is trying to protect Syria.
    But Bibi thinks he controls us, which seems true, and seems to think he must be the toughest guy in the hood to avoid losing pm perch (and go directly to jail), so doesn’t seem likely to stop the slaughter… like the us, he doesn’t do long term thinking.
    And if the Arabs try to cut off oil he thinks us will make up the supply, (probably correct) maybe by trucking Syrian oil thru Jordan. But Jordan would hafta cooperate, and I seem to remember there’s a lot of Palestinians there.
    I wonder if western countries are becoming pariahs to row… and what Japan/ s Korea might think of a gazan genocide; they get some oil from Russia, but imo also from the ME. Seem vulnerable here, think anybody over there is wondering if they’re on the right side of history?
    I’m too old to worry much, but we’ve got grandkids.

  13. Peter Nightingale

    White’s law states that “culture evolves as the amount of energy harnessed per capita per year is increased,….” Instead of “culture” I would have used something more neutral such as “industrial development,” but that’s not the point.

    With “it’s the energy, stupid” in mind, I’m puzzled that I never hear about Congress Passes Menendez-Rubio Bill Reshaping U.S. Policy in Eastern Mediterranean. I find it hard to believe that this has nothing to do with the shipment of weapons to Israel. Am I alone?

Comments are closed.