Will oil and globalisation continue to keep the peace?

With Iran threatening to close the Strait of Homurz – through which 32 per cent of global oil supplies and 28 per cent of the world's liquefied natural gas supplies pass every day - because of tighter European Union sanctions on the country's fossil fuel exports, and fears that any blockade of the vital ocean corridor could trigger both military conflict and global economic stability, the stage is set for 2012 to be just as much of a game-changer as 2011.

Saudi Arabia – the west's key ally in the Middle East despite the human rights abuses – has been asked to step up oil production and distribution through the kingdom's east-west pipeline. It can carry up to five million barrels a day – the Strait of Homurz carries some 15.5 million barrels daily - and is seen as a lifeline. For if, and when, EU sanctions and manoeuvring by the United States and Israel push Iranian President Mahmoud Ahmadinejad and the country's clerical elite too far, it is considered vital to global supply. Even so, with the Organisation of Petroleum Exporting Countries predicting that oil demand will grow by 1.1 million barrels per day in 2012 – it might not be enough.

According to the policy director at the National Iranian American Council Jamal Abdi, the tipping point between America-Israel and Iran draws ever closer. In an article for PublicServiceEurope.com, he writes: "The latest assassination of an Iranian nuclear scientist may have been less about sabotaging Iran's nuclear programme than it was about disrupting a planned diplomatic initiative, being brokered through Ankara, between Tehran and Washington. Many analysts, including some considered very close to the American government, have warned recently that the US president's Iran strategy had been reduced to one of de-facto regime change. It is unclear who is at the helm of US policy on Iran and where that policy is supposed to lead. Without a robust alternative, America may end up ambling into a devastating military confrontation with Iran that could have been completely avoidable."

We know that Russia backs Iran – mainly, for trade reasons - and would oppose any United Nations military operation against the country. Meanwhile, China will only go as far as staing that it thinks a nuclear-armed Iran would be dangerous for global stability - without advocating its own embargo on the country's oil. And, in any case, oil embargoes have never achieved much in the past. You only have to look to South Africa, Iraq, Cuba and Rhodesia to learn the lessons of history, in that respect. But closure of the crucial Strait of Homurz trade route would certainly force the west into action. For many years now, the world's fragile geopolitical balance has been held together by oil and commerce. And as Paul Stevens, senior research fellow at the respected Chatham House think-tank, wrote in the Financial Times this week: "Cutting off Gulf oil supplies represents an existential threat to the west that it would have to use force to counter. The response, if transit were seriously threatened, would rapidly degenerate into a shooting war between Iran and the US supported by many of its allies. While oil prices might reach unprecedented new levels, the US Navy would quickly restore access."

Back in 2002, the then US President George W. Bush labelled Iran, Iraq and North Korea as an "axis of evil" for the countries' alleged support of terrorism and dogged determination to obtain weapons of mass destruction. One of my old politics professors used to say that the axis actually represented the states seeking to switch from the dollar to the euro for oil trading. He was only half-joking. But the serious point here is that with many experts predicting that peak oil is approaching or may, even, have already passed - combined with the worsening situation in Iran – major instability looks inevitable.

The very things that have prevented geopolitical chaos and major wars for many decades – namely, globalisation, bountiful commodity prices and the oil trade – could yet be the cause of international collapse. Whereas, oil was once the glue holding together the global framework of relative peace and cultural tolerance; it now threatens to obliterate those intergovernmental relationships. Just as Pax Romana was destined to end with hegemonic collapse and bitter military conflict, our modern version of empire – better known as 'the international community' - may now face a critical juncture. We could be at the crossroads that defines much of the early 21st century. And the next few weeks could well determine which way the cards fall for Europe and America.