Crude prices climbed to $30 to the barrel mid-week in the United States and Europe, a hike of 50% compared with the beginning of the year, and 25% from mid-June. That was about when George Bush decided it's time to get rid of Saddam once and for all.
Oil market analysts claim the prices incorporate a danger premium of about $5 per barrel, based on the assumption that the Iraqi oil supply will be cut off. But if war really does break out, oil prices will rise further.
If the only supply affected is Iraq's, says energy expert Dr Amit Mor, the price hike will be moderate, to about $40 per barrel, and will be temporary in nature. Beyond the danger premium already evident in the price of crude, Mor says the big oil producers led by Saudi Arabia and Russia have committed to the United States to increase production, if the Iraqi supply stalls.
Iraq is the world's fifth biggest oil supplier to the United States. It produces 2.3 million barrels a day, and exports 1.5 million of them. Meanwhile, the big oil producers can increase production by about 3 million to 4 million barrels per day.
But there are other scenarios, such as the war spreading and cutting off the supply by other Gulf producers. Or, Islamic nations such as Libya, Iran or Algeria reducing their supply to the United States as a punishment for attacking Iraq.
That, Mor estimates, could lift oil prices to $50 per barrel or more. But even then, the big oil producers can act to reduce the shock.
OPEC's price today is about $26 to $27 per barrel, while the market price is $29-30. The gap is caused by merchants holding back barrels for the rainy day they expect to follow military action in the Gulf.
The OPEC leaders are scheduled to meet in Tokyo on October 19 to decide whether to up production in order to stabilize prices. But meanwhile, each fluctuation of rude prices reverberates here in Israel. Each dollar added per barrel costs the Israeli economy $65 million a year.
Since we cannot predict whether war really will break out, let alone how high crude prices will climb it is too soon to estimate its price to the Israeli marketplace.
Could violence in the Gulf spark a worldwide oil shortage? Mor thinks not. Other nations have enough unexploited oil production capacity that can be utilized at short notice, he says. There will be oil but it will be more expensive.
As for Israel, no worries here. Whatever happens, it can get enough oil for its needs in the international market.