How does oil affect the economies in Israel Saudi Arabia and Iran?

Answer 1

Israel: As Israel has no oil fields, a lot of Israeli foreign policy (after trying to settle the Arab problems) is to find a reputable source of energy. This energy policy led to a strong alliance with Iran from 1948-1979 during which Israel purchased numerous millions of barrels of Iranian oil. Under Israeli occupation in from 1967-1982 the Sinai Peninsula was host to numerous Israeli-started operations to drill oil from the area. The Peace Treaty between Egypt and Israel requires Egypt to sell oil to Israel at a low rate and to keep it flowing almost continuously. In the recent tumult in Egypt, the Egyptian government has not been careful about adhering to these regulations. Israel is now experimenting with deep-sea oil drilling in the Mediterranean close to Lebanon in the hopes of finding new petroleum to keep its economy functioning.

Saudi Arabia: Oil is the only reason Saudi Arabia has an economy at all. The Saudi family, although relatively wealthy when they conquered Hejaz, had little wealth as compared to contemporaneous European countries. The discovery of nearly inexhaustible oil wealth in Saudi Arabia allowed the Saudi Monarchy to consolidate power and engage in a virtuous cycle of bringing new technologies to Saudi Arabia to acquire more oil to increase the government to bring new technologies into the county and so forth. Since the oil wealth funds most of Saudi Arabia's government, little respect is paid to the Saudi citizens since the government need not depend on them for its survival. This has made Saudi Arabia a very authoritarian state.

Iran: Unlike Saudi Arabia, Iran has an economy outside of oil production, however, the current regime in Iran is attempting to squash all political dissent and is using the oil money it has to undergird its policies and pay its soldiers. It is also destroying nascent industry in the country which could compete with these revenues. In the past Iranian oil was one of the major reasons why the British urged America to lead a coup d'état against President Mossadegh in 1953 (which restored the Anglophilic Shah Mohammed Reza Pahlavi to power) and was one of the main reasons that Iraq attempted to reclaim the Shatt Al-Arab and Iranian Khuzestan (an area with significant oil fields) in the Iran-Iraq War of 1980-1988.