The Israel issue always was blown up fantastically out of proportion to its real-world impact. Where it is regarded as an affront to Arabic honor it is a stain that must be washed in blood. Where it is regarded as the migration of a certain principally Eastern European population that happens to be Jewish the problem falls away - the exclusion and hostility that has so alienated the two sides is essentially an artificial creation, not that it makes it any less an obstruction now. Nor, to be cold about it, does it directly affect a significant portion of the populations of either the West or the Arabic countries - were all the Palestinians and all the Israelis to drop dead suddenly neither the West nor the Arabic world would do much more than grieve for a human tragedy, but a demographic pinprick.
(Nor is it a necessary religious confrontation - Islam is more comfortable both historically and theologically with Judaism than Christianity is, even, in a number of ways.)
While it is perfectly true that the center of the Arabic world is dependent on an extraction economy that its controlling elite has failed to expand and diversify (for its own reasons to which the author above alludes) that isn't really an excuse. The "Arab" world is much more than Saudi Arabia and a few principalities on the Arabian littoral; it consists of billions of people and a huge potential in terms of human and natural resources that has nothing to do with oil. Something is clearly holding these back, and it isn't the West. It is the toxic political brew composed of elements of militarism and religious fundamentalism that has intoxicated a ruling elite that is profoundly threatened by the necessity to release control in order to foster progress. This elite is using anti-Westernism, and specifically anti-Americanism, as the same sort of security blanket the Soviet Union and its controlling elite did. It is similarly brittle, and in time will fall to the human aspiration for freedom that only ignorance can suppress. There may be an ocean of blood between now and then. It is, essentially, a new Cold War.