There's another problem: the vast majority of so-called "surplus capacity" - the extra production-ready capacity to increase global supply - lies north of Hormuz in Saudi Arabia and other Gulf facilities. For years, Western efforts to prevent a catastrophic increase in energy prices as result of a Persian Gulf crisis have relied on two levers: surplus Saudi production capacity, and release from US and European strategic petroleum reserves (SPRs).
Those two elements appeared to meet economists' definition of an effective counterbalance to a panicked, supply starved market: the ability to replace up to 5 percent of global demand within 30 days and sustain it for 90 days.
Today, most oil experts agree, the numbers just don't add up. Jim Krane, a Cambridge University expert on Gulf oil, says Saudi Arabia has lost its ability to be the "swing producer" who controls oil prices - the very essence of the protection-for-production alliances it has enjoyed with the United States since the mid-1970s.
"With domestic electricity demand rising 10 percent per year in Saudi Arabia, the kingdom now devours more than a quarter of its oil production - nearly three million barrels per day," Kane wrote in The Wall Street Journal. "In the medium-term, Saudi Arabia is in danger of losing its all-important ‘reserve margin' of oil production that so often calms market volatility. Loss of this spare capacity would remove a crucial safety mechanism from the global economy, to say nothing of tying America's hands when it comes to future moves against oil states."
All of this is a prescription for market panic, record oil prices and a sharp dive for all of the world's major economies back toward the economic abyss.
Given the nuclear question at the heart of the Iran standoff, perhaps it's not surprising that more light is being shined on the military and political aspects of an October crisis in the Gulf.
Then again, there is a compelling precedent.
In 1980, officials of Ronald Reagan's presidential campaign feared that President Jimmy Carter, then holding a slim lead, would announce a last-minute deal to free American hostages being held in Iran to seal his re-election. According to Iranian officials involved in those talks, Reagan campaign emissaries won a promise from Iran, which by that point loathed Carter, not to release the hostages before the vote. Congressional investigations subsequently disputed the charges, but questions remain.
Could Romney's campaign, on far better terms with Benjamin Netanyahu than Obama's White House, be trying to engineer something similar?
It's quite possible. But the fact is that Netanyahu can add the numbers, too, and faces his own dilemma. Yes, a strike before the election could help ensure a second term for a president he clearly finds hard to deal with. Yet there will never be a moment when Barack Obama is as likely to stand unquestioningly behind an Israeli action as on the eve of a tight re-election battle.
With all this swirling, and with a third US carrier task force in the Gulf along with a French carrier, uncertainty prevails. With even the most perfectly designed and executed Israeli attack likely to set back Iran's nuclear program only a few years, many are hoping that Iran's current economic collapse will convince Israel and its hawkish American supporters to be patient.
Otherwise, a regional crisis involving uranium could very quickly become a global one involving oil.
