US fails to renew emergency oil supply pact with Israel

Barack Obama  picture: Reuters
Barack Obama picture: Reuters

The agreement guaranteeing Israel's oil supplies in wartime was first signed in 1975. 

The US has not renewed a historic agreement under which it guaranteed a supply of oil to Israel in emergencies, that is, instances in which Israel might be cut off from its regular commercial sources of oil because of war or closure of sea lanes. The agreement expired in November 2014, and since then the US administration has done nothing to renew it, Washington sources told "Globes".

The sources said that it was not clear whether this was a deliberate step by the administration, stemming perhaps from renewed friction between Prime Minister Benjamin Netanyahu and the White House, or a matter of bureaucratic inertia in Washington.

The agreement was first signed in 1975 during the Ford administration, two years after the Yom Kippur War and following the second disengagement agreement between Israel and Egypt in September 1975, under which Israel agreed to withdraw from the Egyptian oil fields in Sinai. The agreement by the US to guarantee Israel's oil supply in emergencies was one of the most important of the incentives that motivated Israel to give up the oil fields.

In 1979, during the Carter administration, Israel and Egypt signed the Camp David Agreements, which were accompanied by two agreements between the US and Israel in the format of the 1975 agreement. In these agreements, the US gave Israel guarantees that it would have access to American oil if it was unable to supply the demand of its internal energy market because of war constraints. The agreements even stipulated that the US would assist in transporting oil to Israel if Israel was unable to procure oil tankers on the open market. The two agreements were eventually consolidated into one document. The agreement was set to last for fifteen years, and was supposed to have expired on September 25, 1994. At that point, the Clinton administration extended the agreement for ten years, and in 2004 it was extended for a further ten years. As mentioned, it expired in November 2014, and nothing has been done about renewing it.

Now, apparently after a push by the pro-Israel lobby in Washington AIPAC, a group of Democratic and Republican senators has written to Secretary of State John Kerry calling on the administration to renew the historic agreement. The letter is signed by Lisa Murkowski, who is chair of the Senate Energy and Natural Resources Committee, and Mark Warner, the senior Democratic member of the committee, and four other senators.

Israel has never invoked the agreement, but Israel sources say that its importance lies in its very existence. An Israeli source compared the oil supply agreement to the loan guarantee agreement between the two countries that enables Israel to obtain commercial loans at low rates of interest. "Israel used the loan guarantee agreement very sparingly, but it is important that the loan guarantees agreement should exist, and the same applies to the energy agreement that guaranteed a regular supply of oil," the source said, "We never used it, but it's important that it should lie signed in a drawer."

Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Barack Obama  picture: Reuters
Barack Obama picture: Reuters
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