This day in 1973 saw the beginning of the four-month oil crisis that rocked the world’s economy and forced the United States of America to reconsider its reliance on oil imports from the Middle East.
The embargo was initiated by the Organization of Arab Petroleum Exporting Countries (OAPEC) as a direct response to the US’s involvement in the Fourth Arab-Israeli or Yom Kippur War. The decision of the US to provide munitions and other supplies to the Israeli government was in direct contradiction to the demands of the Arab nations. Their response was to hit the US where it hurt, by cutting off its oil supply and forcing it to re-think its alliance with Israel, and indeed its entire Middle East policy.
In practical terms, the embargo presented a host of immense difficulties for the US. The American economy worked on the principle that there was a cheap and plentiful supply of oil at its command, and had not made contingency plans should the supply suddenly be cut off.
In a matter of weeks, the US was in very real danger of running out of fuel, panicking ordinary citizens and politicians alike. The reliance on the automobile was such that any shortage of fuel would render the vast majority of the labor force immobile, and the economy began suffering accordingly.
As demand rapidly heightened, oil prices spiraled, and queues for petrol became the iconic image of the standoff. In an unprecedented move, President Nixon was forced to enact emergency legislation that rationed petrol, and initiated a long-term program that would increase the US’s self-reliance when it came to fuel.
As the effects of the embargo deepened, a series of frantic negotiations between America and Israel ensued, in an effort to find a compromise that would reduce the damage to the US economy, and prevent further hostilities in the Middle East. US Secretary of State Henry Kissinger compelled the Israelis to relinquish some of their territorial gains in order to placate the Syrians and the Egyptians. As a result of the talks, Israel agreed to withdraw some of its troops, firstly from the Sinai Peninsula, and then subsequently from the Golan Heights. These actions proved just enough to placate the Arab world, and much to the relief of the Americans, the embargo was lifted on 17 March 1974.
The embargo may only have been in effect for a matter of months, but the impact was long-lasting, both in the Middle East and the US. Emboldened by their action, the OAPEC countries were able to make more demands of the major oil companies operating in their countries, and successfully negotiated huge increases in the cost of oil per barrel. This resulted in increased wealth and greater strength for the oil-producing nations.
In the US, a vast program of offshore oil drilling began, and efforts were made to ensure that America would never again be held to ransom by the Arab states.
Credit: Alamy AAMB5Y
Caption: One of many signs during the 1973 oil embargo, indicating that petrol has run out.