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Iran’s call for an oil embargo on Israel shakes markets

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The prospect of an oil embargo stemming from the conflict between Israel and militant groups contributed to a sharp but brief rise in oil prices on Wednesday.

Iranian Foreign Minister Hossein Amir-Abdollahian called on Islamic countries to boycott Israel, including stopping oil shipments, according to Iranian media. He was speaking at a meeting of the Organization of Islamic Cooperation in Jeddah, Saudi Arabia.

Although Israel imports almost all of its oil, analysts say such an embargo would likely have little immediate impact because the country does not buy oil from major Persian Gulf producers like Saudi Arabia, the United Arab Emirates or Iran.

Instead, Kazakhstan, where oil is mainly produced by joint ventures involving Western companies including Chevron and Exxon Mobil, and Azerbaijan are among Israel’s largest suppliers. Nigeria is also an important supplier.

But even raising the specter of an embargo recalls the ban on oil shipments initiated 50 years ago during the 1973 Arab-Israeli war. The embargo, imposed by Arab members of the Organization oil-exporting countries to the United States and some other countries for their support of Israel, has led to long lines at gas pumps in the United States and a rise in oil prices that has continued for decades later.

Concerns about a widespread embargo appear partly to blame for the price of Brent crude oil, the international benchmark, rising to around $93 a barrel from $91.50 on Wednesday. Brent prices then fell.

“Most people are just afraid of what awaits them in the future,” said Viktor Katona, an analyst at Kpler, a company that tracks oil shipments.

It would be a big step forward for major producers like Saudi Arabia to follow Iran’s lead in a broader confrontation with the West. “There is no sign at this time that other OPEC members would agree or be willing to join such action,” said Richard Bronze, head of geopolitics at Energy Aspects, a research company.

But Israel could be vulnerable to damage to its ports or disruption to shipments. Aware of the risks, Israel appears to have taken care to maintain relationships with its suppliers from a variety of sources, Mr. Bronze said.

Already, one of its two main oil ports, Ashkelon, has at least temporarily stopped receiving oil, apparently for security reasons, analysts say. Israel can still receive oil through another port in Haifa, north of Tel Aviv, although Mr. Katona said it had not received any fuel in more than a week. He added that Israel had oil reserves for at least a month in storage tanks.

Mr. Katona estimates that Israel imports about 270,000 barrels of oil per day, with about 90,000 barrels per day, or a third, from Kazakhstan and 50,000 barrels per day from Azerbaijan.

Kazakhstan and Azerbaijan have predominantly Muslim populations, but are unlikely to join Iran’s foreign minister’s call for an embargo. They are not among Middle Eastern states like Jordan and Egypt, whose public opinion closely monitors tensions between Israel and the Palestinian populations in the occupied West Bank and Gaza.

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nytimes

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