Small-State Oil Trade as a Ticket into New Regional Networks: Israel’s Quest for Oil in South America and the North Sea

Literature on the foreign policy dynamics of oil trade focuses on the large oil suppliers and consumers in the international system. Small actors who trade on the margins of the market are often overlooked and viewed as politically disadvantaged in the trade. However, we argue that small oil importers occasionally leverage their oil deals to gain access to their suppliers’ regional network, using them as a trusted broker to gain political benefits in an otherwise remote or politically inaccessible region. Declassified Israeli, American and British archival sources show how Israel capitalized on the 1973 OPEC oil embargo and purchased oil it did not need from cash-strapped Ecuador to gain access to Latin American markets, enabling it to trade in weapons and garner political favors. Israel tried to repeat this accomplishment in the North-Sea in 1982 but failed to leverage an oil deal with Norway to gain access to the North-European network, despite US assistance. This paper examines the conditions for such efforts to succeed, arguing that oil’s geographical and economic traits make it uniquely adept at creating new connections between small traders, but only if the supplier has sufficient reason to break-out of its current network and risk damage.









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