Israeli Prime Minister Golda Meir once joked that "It took Moses 40 years to find the only place in the Middle East that has no oil." Upon its inception, the state of Israel was hamstrung by the Arab world's dominance of the global oil and gas markets and its own lack of energy resources. Today, however, Israel is an energy exporter and has transformed the regional energy market and geoeconomic landscape. The Russian invasion of Ukraine in February 2022 has proven to be a boon for the Israeli energy sector, as various countries in Europe are looking to reduce their reliance on Russian energy. With this increased economic stature as an energy supplier (albeit a comparatively small one) comes increased diplomatic stature as well. Israeli energy exports have been increasing rapidly in recent years, and there is sufficient cause to believe that even greater opportunities will arise for Israel's energy sector in the future.
Energy: Israel's Achilles' heel
Iran would also emerge as one of Israel's main oil suppliers. Oil imports from Iran once made up the majority of Israel's oil imports until the revolution of 1979. Before the 1979 revolution, Iran's diplomatic and energy policies were more pro-Western in alignment. Tehran was once a partner of America in the region. This disruption of the flow of Iranian oil forced Tel Aviv to diversify its oil sources. Since such a significant portion of the world's oil originated (and still originates) from the Arab world, the oil-producing Arab states could use their dominance of the market as a tool for political blackmail. The most notable example of this "oil weapon" being utilized was the oil embargo following the Yom Kippur War of 1973. Since then, however, other oil-producing states have gone on to acquire greater shares of the global market. This has had the effect of countering and blunting the effects of the Arab "oil weapon."
Following the peace agreement between Egypt and Israel, the former agreed to export crude oil to the latter. Oil from Egypt would serve to make up the shortfall resulting from Iran's cutting of ties. After the collapse of the USSR in 1991, Russia would emerge as a dependable exporter of energy to the Israelis. In fact, Israel's primary oil suppliers are former Soviet states (Azerbaijan and Kazakhstan). The African country of Gabon is likewise a major source of oil for Israel. Nearly a quarter of the country's oil comes from Gabon and other African states like Nigeria and Congo-Brazzaville. In 2009, the Middle Eastern energy landscape was permanently altered after a large natural gas field was discovered off the Israeli coast.
From dependency to net exporter
The Tamar gas field is estimated to contain 200 BCM of natural gas, equaling more than half of what the entire EU consumes annually. In 2010, the Leviathan gas field was discovered west of Haifa. This gas field contained more than twice the amount of natural gas (500 BCM). Both the Tamar and Leviathan fields transformed Israel into a net exporter of energy. As a consequence of these discoveries, Israel's standing, both geoeconomically and geopolitically, was elevated. In October 2016, the partners in charge of the Leviathan gas field inked an agreement to sell gas to Jordan. Jordan imports nearly all of its energy requirements, and most of that energy comes from natural gas. Israel would also export energy to its other neighbor, Egypt.
Israel has been in talks with countries like Turkey, Greece, and Cyprus to construct gas pipelines. These talks, though, have gone nowhere. Building a natural gas pipeline from Israel to Europe presents serious logistical and political challenges. The ongoing disputes in Cyprus and the Middle Eastern geopolitical situation have complicated this. The proposed EastMed (Eastern Mediterranean) natural gas pipeline was to connect the Israeli natural gas fields with Cyprus and Greece. Unfortunately, the pipeline ran into political roadblocks in the form of continued Turkish objections and withdrawal of American support in 2022. Despite that, there is ample reason to be optimistic about the prospects of Israel's energy sector. In 2024, despite the war in Gaza and other regional flashpoints, Israeli natural gas exports to Egypt and Jordan jumped by more than 13%.
Even more important, however, is the possibility of Israeli natural gas exports to the European Union. In June 2022, Egypt, Israel, and the EU signed a memorandum of understanding "on the transport, trade and export of natural gas to the European Union." US President Donald Trump has also announced his plan to include Syria, Lebanon, and Saudi Arabia in the Abraham Accords. The signing of the MoU with the EU, the staying power of the ceasefire between Jerusalem and Tehran, and the potential for normalization with more Arab states could have positive consequences for Israel's natural gas sector. Additionally, if the Abraham Accords are expanded to include Syria and Lebanon, there will be opportunities for the Israelis to break into new markets. Syria and Lebanon are both heavily dependent on energy imports from abroad. There is more talk of possible Israeli energy sales to the Far East as well. The Far East and South Asia have massive potential as a market for Israeli natural gas due to the rapid growth of countries like China and India. Additionally, Israel has close ties to New Delhi and an amicable relationship with Beijing.
The discovery of natural gas off Israel's coast was transformative for the country's economy and geopolitical standing. With the Global South playing catch-up, there could be more opportunities for the Israeli energy sector to exploit new markets. Developments in the Middle East could grease the skids for increased trade and cooperation with EU member states, thirsty for non-Russian gas. On the other hand, Israeli military actions in the future could undo this progress. Going forward, Israel-EU and Israel-East/South Asia trade patterns and energy policy will be interesting to watch. Moses may have led the Israelites to the only place in the Middle East with no oil, but Israel is a land of milk and honey when it comes to natural gas.
Further reading:
1: The Star and the Scepter by Emmanuel Navon (PURCHASE IT HERE: https://amzn.to/4kp1gZM)
2: The Routledge Handbook on Israel's Foreign Relations by Joel Peters and Rob Geist Pinfold (PURCHASE IT HERE: https://amzn.to/4069n69)
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