While oil analysts say that prospects of a continuing decline in the dollar no doubt played an important role in Monday's price jump, they also pointed to this weekend's pointed reaction by the commander of Iran's Islamic Revolutionary Guard Corps, Gen. Mohammed Ali Jafari, to recent U.S. and Israeli threats to attack Tehran's nuclear facilities, as well as his assessment that those threats should be taken seriously, as a major factor.
In addition to retaliating against any regional powers, presumably including Israel, which take part in such an attack, Jafari warned that Tehran would "definitely act to impose control on the Persian Gulf and Strait of Hormuz," after which, he added, "the oil price will rise very considerably, and this is among the factors deterring the enemies."
Indeed, even without an attack, continuing tension involving Iran's nuclear program will almost certainly contribute to a continued rise in oil prices to as high as $170 a barrel in the coming weeks and months, OPEC's president, Chakib Khelil, said during a conference in Madrid.
World oil prices have risen by nearly 50 percent since the beginning of 2008 and nearly doubled over the past year. Analysts have argued over how much of that increase is due to structural factors in the world economy -- such as growing demand in middle-income countries and the depreciating dollar that would tend to make the price increase permanent -- and how much is related to worries about possible supply disruptions arising from the kind of conflict that has plagued the Niger Delta region in Nigeria, terrorist attacks by al Qaeda in the Gulf, economic or other sanctions against key oil-producers, or war.
The latter risk factors, according to some analysts here, could account for as much as 50 dollars of the total current price, although most believe that the figure is about half that.
How much is due to the uncertainty about Iran is also a matter of considerable debate. Many point to the unprecedented 11-dollar one-day spike in oil prices -- from $128-139 a barrel -- that took place Jun. 6 after Israel's Deputy Prime Minister Shaul Mofaz warned that an Israeli attack on Tehran's nuclear facilities was "unavoidable" if international pressure did not succeed in persuading it to freeze its uranium enrichment program.
While that incident offered the most spectacular suggestion of a relationship between threats against Iran and the price of oil, most analysts believe the effect is somewhat more modest, albeit still quite real.
"I don't think it would be unreasonable to say it could be a few dollars (out of the current $140 a barrel)," Paul Saunders, an energy expert who directs the Nixon Center here, told IPS.
And in Congressional testimony just last week, Daniel Yergin, a long-time analyst and historian of the oil industry, observed, "You see the Iranians make a ...bellicose statement, and you see the price of oil go up five or seven dollars."
That is not a new pattern, according to Klare, who said the possibility of a 100-dollar-a-barrel price first loomed nearly two years ago amid speculation during the July-August war between Israel and Hezbollah that the conflict could spread to Iran. At that time, the price hovered around $75 a barrel before falling back to just over $50 a barrel in early 2007, its lowest point in the last 18 months.
Even though the price retreated after Mofaz' remarks, events of the past 10 days have helped drive up the price to historic levels. These include the publication of a front-page New York Times article about a massive Israeli air exercise that purportedly simulated an attack on Iran, and a New Yorker article by investigative journalist Seymour Hersh about a 400-million-dollar covert action program directed against Tehran; and public warnings by U.S. hawks close to Cheney's office that either the Israelis or the U.S. would attack Iran between the November elections and the inaugural of a new president in January 2009; as well as Jafari's weekend remarks.
Klare believes that the oil markets believe "there's at least a 50-percent chance that the U.S. and/or Israel will attack Iran before Bush leaves office and that Iran will retaliate (in ways) ...that would push oil prices to $200 a barrel and above" which is why speculators are buying oil futures now at $140 and even $150 a barrel.
"The run-up in the price today will only encourage more speculators to get into the act, unless the administration makes clear it has no intention of attacking Iran and will force Israel to make a similar declaration, neither of which is likely to occur," he told IPS.
Meanwhile, the voting public is clearly worried about where oil prices are going. Seven out of 10 people told a Los Angeles Times/ Bloomberg poll last week that their families had suffered "financial hardship" as a result of the price increases, and more than eight in 10 blamed the administration for "not (having) done enough" to ease the impact.
According to a Pew Research Center poll taken earlier in June, three of four voters believe gas prices will be "very important" in deciding who to vote for -- a larger percentage than those who cite terrorism or the Iraq war. By margins of nearly 20 percent, those same voters said they had more confidence in Democrats and Sen. Barack Obama than they did in Republicans and Sen. John McCain to deal with the issue.
That's one reason why most analysts rate the chances of an attack by either country before the election as quite low. Others accept Janari's logic that the likely impact on oil prices before or after the elections make an attack improbable.
"I think one of the things that makes (an attack) a lot less likely is what it will actually do to the oil price," said the Nixon Center's Saunders.
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