Even by the uniquely bleak standards of the Middle East, things are looking pretty grim right now. Iran is still working methodically toward a nuclear weapon—effectively getting a free ride during the interregnum between George Bush and Barack Obama, both of whom are distracted by the global economic crisis. There is no military option under consideration right now: Israel appears to be restrained by Bob Gates's Pentagon, which is reportedly withholding cooperation, such as supplying Jerusalem with IFF (Identify Friend or Foe) codes. That will no doubt continue into the next administration. "I think all of us have very little time," Israel's ambassador to the United States, Sallai Meridor, said in an interview this week. He said there is still room for negotiation, but only with vastly intensified diplomatic pressure. Otherwise "you could have a catastrophic nuclear cascade in the region. And the time between that moment [Iran getting nuclear weapons capability], which could be very soon, and when nuclear weapons fall into the hands of nonstate actors or terrorists, could be not far off … Are we allowing the genies to go out of the bottle, so that our children will never be able to put them back in?"

Prospects for a two-state solution, meanwhile, are only receding. If there's no deal, and the occupied lands remain in Israeli hands, at some point "Greater Israel" becomes a land with a majority Arab population ruled by a minority of Jews. Though the birthrate numbers are in dispute, such a binational apartheid state cannot permanently endure as a Jewish entity. "The end of Zionism is in sight, brought to us by the very hands that created the binational reality on the ground in the name of Zionism," Gershon Baskin warned in The Jerusalem Post this week. Outgoing Prime Minister Ehud Olmert is frantically trying to avert that fate and, not coincidentally, rescue a legacy for himself other than as Israel's Richard Nixon—a scandal-crippled leader who is seen as responsible for his country's only lost war (Lebanon in 2006). But Olmert's negotiations with Palestinian leader Mahmoud Abbas are proving fruitless as the two of them near their deadline of getting at least an agreement in principle by the end of 2008.

Asked about the prospects, Meridor smiles slightly—very slightly—and then suggests that divine assistance might be needed with Chanukah coming up next week. "Chanukah is, among other things, a holiday of miracles," he notes. Even that's not terribly reassuring: God may have made one day's supply of oil burn for eight, but let Him try bringing Fatah and Hamas together for an hour. Especially since Hamas is using the truce to rearm through Egypt and oust Fatah from the West Bank as well as Gaza. "I'm afraid there is no good news here," says Meridor. So Olmert, despite his hints at dramatic concessions, has no Palestinian interlocutor worth talking to, which means he has no deal. And even if he somehow gets one, Likudnik-in-chief Bibi Netanyahu is leading in the polls to succeed him and promises to scuttle what's left of the "Annapolis process."

If you've already stopped reading out of disgust or despair, I won't take it personally. But before you click off, consider this one very strange sign of hope: oil, which played such a miraculous role in the Chanukah story, may be a major factor once again. The global economic crisis is terrible for our pocketbooks, but it could be beneficial to our safety. The reason is oil's precipitous plunge. Despite OPEC's decision Wednesday to cut production by 2.2 million barrels a day—its biggest reduction ever—prices continue to drop in the face of declining global demand. The new era of $40 or less (per barrel) oil is in turn diluting the influence of the energy-rich autocrats in Russia, Venezuela and Iran, who only a few months ago seemed comfortable defying the West. Most of all, it is putting Iran under the kind of pressure that Tehran has not endured for several years—especially given the signs that Iraq, where Iran once had hopes of tying down the Americans for years, is stabilizing. "For the first time in five years, those things are going in our direction, not in the direction of the Iranians," says Iran expert Karim Sadjadpour of the Carnegie Endowment.

Meridor argues that this "opens up" new prospects for putting pressure on Iran, for example by gaining a new consensus to cut off refined petroleum products. "If oil prices stay low, this may open opportunities for tough sanctions to work," he says. "When the Iranians were getting $140 a barrel, with a budget based on maybe $60 to $70 a barrel, they had a surplus they could pour into the economy to offset the impact of international sanctions … But if sanctions become really serious, and at same time oil prices remain at current levels, I think there is chance of getting the Iranian leadership to rethink their strategy."

It is just possible, in other words, that the inexorable decline in oil prices could be the variable that stops, or reverses, the downward spiral into a nuclear-armed and far more dangerous Middle East. Now bear in mind this is like one of those movies where the lead characters are facing disaster and one of them blurts out, "It's crazy, but it just might work.…" (It always does, of course, in the movies). But one possible scenario goes like this. While none of the experts I've talked to thinks that the price of oil will by itself be enough to pressure Iran into abandoning its nuclear program, it could cost Mahmoud Ahmadinejad the election in June 2009.