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1973 oil crisis - Arab oil embargo | | 1973 oil crisis - Arab oil embargo: Encyclopedia II - 1973 oil crisis - Arab oil embargo | | On October 16th, 1973, as part of the political strategy that included the Yom Kippur War, OAPEC cut production of oil, and placed an embargo on shipments of crude oil to the West, with the United States and the Netherlands specifically targeted. Also imposed was a boycott of Israel, and price increases. Since oil demand falls little with price rises, prices had to rise dramatically to reduce demand to the new, lower, level of supply. Anticipating this, the market price for oil immediately rose substantially. A world financial system already ...
See also:1973 oil crisis, 1973 oil crisis - Origins of the 1973 world oil shock, 1973 oil crisis - World competition over resources, 1973 oil crisis - Founding of OPEC, 1973 oil crisis - The Yom Kippur War, 1973 oil crisis - Arab oil embargo, 1973 oil crisis - Chronology, 1973 oil crisis - Immediate economic impact of the embargo, 1973 oil crisis - Price controls and rationing, 1973 oil crisis - Conservation and reduction in demand, 1973 oil crisis - Search for alternatives, 1973 oil crisis - Macroeconomic effects, 1973 oil crisis - Perception of the oil industry, 1973 oil crisis - Effects on international relations, 1973 oil crisis - Decline of OPEC, 1973 oil crisis - Notes and references | | | 1973 oil crisis, 1973 oil crisis - Arab oil embargo, 1973 oil crisis - Chronology, 1973 oil crisis - Conservation and reduction in demand, 1973 oil crisis - Decline of OPEC, 1973 oil crisis - Effects on international relations, 1973 oil crisis - Founding of OPEC, 1973 oil crisis - Immediate economic impact of the embargo, 1973 oil crisis - Macroeconomic effects, 1973 oil crisis - Notes and references, 1973 oil crisis - Origins of the 1973 world oil shock, 1973 oil crisis - Perception of the oil industry, 1973 oil crisis - Price controls and rationing, 1973 oil crisis - Search for alternatives, 1973 oil crisis - The Yom Kippur War, 1973 oil crisis - World competition over resources, Energy crisis, Supply shock, Oil boom, 1979 energy crisis, Oil price increases of 2004, Hubbert peak theory, Boycott, Embargo | | |
| | | 1973 oil crisis: Encyclopedia II - 1973 oil crisis - Arab oil embargo
1973 oil crisis - Arab oil embargo
On October 16th, 1973, as part of the political strategy that included the Yom Kippur War, OAPEC cut production of oil, and placed an embargo on shipments of crude oil to the West, with the United States and the Netherlands specifically targeted. Also imposed was a boycott of Israel, and price increases. Since oil demand falls little with price rises, prices had to rise dramatically to reduce demand to the new, lower, level of supply. Anticipating this, the market price for oil immediately rose substantially. A world financial system already under pressure from the breakdown of the Bretton Woods agreement, would be set off on a path of a series of recessions and high inflation that would persist until the early 1980's, and elevated oil prices that would persist until 1986.
The graph to the right is based on the nominal, not real, price of oil, and so overstates prices at the end. However, the effects of the Arab Oil Embargo are clear - it effectively doubled the real price of crude oil at the refinery level, and caused massive shortages in the US. This would exacerbate a recession that had already begun, and lead to a global recession through the rest of 1974.
Over the long term, the oil embargo would change the nature of policy in the West, towards more exploration, towards energy conservation, and towards more restrictive monetary policy, which more aggressively fought inflation.
1973 oil crisis - Chronology
- Sept. 15 - The Organization of Petroleum Exporting Countries (OPEC) declares a negotiating front, consisting of the 6 Persian Gulf States, to pressure for price increases and an end to support of Israel, based on the 1971 Tehran agreement.
- Oct. 6 - Egypt and Syria attack Israel on Yom Kippur, starting the fourth Arab-Israeli War.
- Oct. 8–10 - OPEC negotiations with oil companies to revise the 1971 Tehran price agreement fail.
- Oct. 16 - Saudi Arabia, Iran, Iraq, Abu Dhabi, Kuwait, and Qatar unilaterally raise posted prices by 17 % to $3.65 a barrel and announce production cuts.
- Oct. 17 - OAPEC oil ministers agree to use oil as a weapon to punish the West for its support of Israel in the Arab-Israeli war. They recommend an embargo against unfriendly states and mandate a cut in exports.
- Oct. 19 - Saudi Arabia, Libya and other Arab states proclaim an embargo on oil exports to the United States.
- Oct. 23–28 - The Arab oil embargo is extended to the Netherlands.
- Nov. 5 - Arab producers announce a 25 % output cut. A further five percent cut is threatened.
- Nov. 23 - The Arab embargo is extended to Portugal, Rhodesia, and South Africa.
- Nov. 27 - U.S. President Richard Nixon signs the Emergency Petroleum Allocation Act authorizing price, production, allocation and marketing controls.
- Dec. 9 - Arab oil ministers agree a further five percent cut for non-friendly countries for January 1974.
- Dec. 25 - Arab oil ministers cancel the five percent output cut for January. Saudi oil minister Yamani promises a 10 % OPEC production rise.
- Jan. 7–9, 1974 - OPEC decides to freeze prices until April 1.
- Feb. 11 - U.S. Secretary of State Henry Kissinger unveils the Project Independence plan to make U.S. energy independent.
- Feb. 12–14 - Progress in Arab-Israeli disengagement brings discussion of oil strategy among the heads of state of Algeria, Egypt, Syria and Saudi Arabia.
- Mar. 17 - Arab oil ministers, with the exception of Libya, announce the end of the embargo against the United States.
Other related archives1945, 1950, 1960, 1967, 1970, 1971, 1973, 1974, 1975, 1976, 1977, 1978, 1979 energy crisis, 1980, 1986, 1987, 2007, 6 November, 74, Abu Dhabi, Advertising Council, Ahmed Zaki Yamani, Alberta, Algeria, Arab, Arab-Israeli War, Arab-Israeli conflict, Aramco, August 15, Australia, BBC, Boycott, Bretton Woods, Bretton Woods system, British, British government, CAFE, Canada, Chile, China, Cold War, Daylight Saving Time, Department of Energy, Dutch, Egypt, Embargo, Energy crisis, Europe, European Economic Community, February 23, February 29, Ford Fairmont, Fortune 500, France, Harold Wilson, Henry Kissinger, Hubbert peak theory, Iran, Iraq, Israel, January 2004, January 6, Japan, Kuwait, Latin America, Libya, Mexico, Middle East, National Energy Act, National Energy Program, National Maximum Speed Limit, Netherlands, New York Stock Exchange, New York Times, Nigeria, North American, OAPEC, OPEC, October 17, Oil price increases of 2004, Organization of Arab Petroleum Exporting Countries, Organization of Petroleum Exporting Countries, Persian Gulf, Petro-Canada, Portugal, Qatar, Rhodesia, Richard Nixon, Russian, Salvador Allende, Saudi Arabia, September 11, September 17, Shah, Six Day War, South Africa, Soviet Union, Strategic Petroleum Reserve, Supply shock, Syria, Ted Heath, Thatcherism, Third World, Trente Glorieuses, U.S. Secretary of State, United Kingdom, United Nations, United States, United States dollars, Venezuela, Volkswagen Rabbit, Western Europe, William Simon, World War II, Yamani, Yom Kippur, Yom Kippur War, automobiles, barrel, central banks, coal, crude oil, demand, devalued, economists, electronics, embargo, ethanol, gallon, gasoline, gold, guerrillas, gunboat diplomacy, imports, inflation, interest rates, internal terms of trade, leap years, license plates, macroeconomic, markets, minerals, nationalization, natural gas, newspapers, nominal, not real, nuclear, nuclear power, oil, oil exploration, petrochemicals, petroleum, population density, price, price controls, price sensitivity of oil demand, profits, propane, rationing, recession, renewable energy, resources, ridership, solar power, stagflation, suburbs, supply, toppled, trade, unemployment, vehicles, wheat, wind power, wood fuel
 Adapted from the Wikipedia article "Arab oil embargo", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki |
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