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Oil: U.S. Emergency Oil Supply Pact With Israel

(1975) Mitchell Bard

In 1975, the United States agreed to guarantee Israel's oil supply in emergencies. The pact was signed after the Arab oil embargo roiled the world's economies. The agreement also followed the second disengagement agreement (Sinai II) between Israel and Egypt, which helped pave the way to the eventual peace treaty signed in 1979. As part of Sinai II, Israel withdrew from oil fields in the Sinai.

When the peace treat was signed, Israel gave up all its oil fields, which, at the time, were expected to allow Israel to eventually become energy independent. The U.S. subsequently offered Israel a new agreement that guaranteed access to U.S. oil if war constraints disrupted Israel's supply. It further provided for help in transporting oil if Israel was blocked from doing it alone.

The agreement signed by the Carter administration was for a period of 15 years and was due to expire in 1994. The Clinton administration, however, renewed it for another 10 years. That extension expired in November 2014 and has not yet been renewed by the Obama administration.

Israel has never needed to invoke the agreement, and is now developing a natural gas industry as a result of discoveries of large reserves in the Mediterranean. The ability to use natural gas as well as export it is likely to significantly strengthen Israel's energy security. Nevertheless, Israel would still like to renew the emergency agreement. As one Israeli told Globes, “We never used it, but it's important that it should lie signed in a drawer.”

Source: Ran Dagoni, “US fails to renew emergency oil supply pact with Israel,” Globes, (March 16, 2015).