Could a Mideast War Bring a New Oil Price Shock?
THE war had gone badly for the Arabs, who blamed the United States and lashed out at it in anger. To the shock of both the Arab and industrial worlds, it turned out that the Arabs had economic power that was far greater than anyone had suspected. The use of that power led to recessions and political instability in the West. So it was in 1973, when Israel won a decisive victory in the Yom Kippur War, with some help from the United States. The question now is whether something similar is happening three decades later. As oil prices have risen and stayed high this year, the Western world has looked for someone to blame. First the Western countries agreed that the Organization of the Petroleum Exporting Countries should step up production, but it looks as if there is little they can do. Now the blame is being assigned to terrorists, for their attacks in Saudi Arabia, and to speculators, for overreacting to those attacks.
