Keeping a pulse on $200 oil

As much as the Freddie and Fannie bailout might occupy our attention today, we can't overlook the story that could easily bring about $200 oil.

Over the weekend, the Times of London had a breathless piece about how Team Bush has given Israel the "amber light" for an attack on Iran, attributing this to a proverbial "senior Pentagon official" who said, "Amber means get on with your preparations, stand by for immediate attack and tell us when you’re ready."

“It’s really all down to the Israelis,” the Pentagon official added. “This administration will not attack Iran. This has already been decided. But the president is really preoccupied with the nuclear threat against Israel and I know he doesn’t believe that anything but force will deter Iran.”

It's tempting to dismiss this as another arm of the Murdochtopus stirring the pot — especially given how the reporter who wrote this story has a history of hype about the Israelis getting ready to attack Iran.

But then I check in with the regular Monday morning briefing at Swoop, and I think twice.  The anonymous wonks and insiders there write in a scrupulously detached and non-partisan way, while still sticking their neck out with predictions.  All this year they've been highly skeptical about whether Team Bush is really gung-ho to attack Iran.  But…

US officials view potential Israeli action with deepening concern. The Administration’s and Congressional support for decisive US intervention to protect Israel is unambiguous. One National Security Council official commented: “Our exchanges with the Israelis make it clear that we do not favor military action. But we do not expect them to ask us for permission. They calculate that, if they go ahead, we will have no choice but to support them.”

Exactly.  This won't be like Israel's 1981 attack on the Osirak reactor in Iraq, which went unanswered because Saddam Hussein was too busy fighting a war with Iran.  Iran will fight back in one form or another and U.S. forces will be sucked in.

So how likely is all this now?  It's trite, but true, that war serves as the ultimate distraction from economic problems or corruption scandals… and Israel's prime minister is caught up in a big scandal right now.  One more factor to bear in mind.

Update: More here from Laura Rozen to reinforce the overall thesis.  She quotes former Cheney aide David Wurmser as putting the chances of an Israeli attack at "slightly, slightly above 50-50."  It was a little over a year ago that Wurmser, still in the White House, let it be known around Washington that Cheney was prodding the Israelis to do what Bush would not.