US-Israel Relations: US Fails to Renew Emergency Oil Supply Agreement with Israel

One of the major sacrifices Israel made when it signed its peace agreement with Egypt and agreed to withdraw from the Sinai was to give up the oil industry it had developed. The oil fields were expected to help Israel achieve energy indpendence, so the concession was made reluctantly, and only after the Carter administration agreed to guarantee Israel's oil supply in emregencies.The U.S. also agreed to assist in transporting oil to Israel if Israel was unable to do so itself. This side agreement was a critical factor in convincing Israel to withdraw from the Sinai.

The agreement was for 15 years, but the Clinton administration extended it for another 10 years in 2004. It expired in Novemeber 2014 and has not been renewed by the Obama administration.

Israel has never needed to use the agreement; however, it is an important safety net in the event of a major crisis that deprives Israel of the oil it needs. President Obama's unwillingness to sign a renewal may be related to his anger toward Israeli Prime Minister Benjamin Netanyahu. Members of Congress are now calling on the administration to renew the agreement.

Source: Ran Dagoni, “US Fails to Renew Emergency Oil Supply Agreement with Israel,” Globes, (March 16, 2015).