Saturday, 17 October 2020


On this day in 1973, OPEC (then OAPEC, the Organisation of Arab Petroleum Exporting Countries despite Venezuela being a charter member) ministers came to a consensus to use their cartel powers to influence the West’s materiel and monetary support for Israel during the Yom Kippur War when the country made incursions into Syria and Egypt, advancing towards the economic and strategically important Suez Canal (see previously) and retaliated against Canada, Japan, the Netherlands, the UK and the US by a crippling quadrupling of prices, a shock to markets that precipitated the 1973 Oil Crisis.

Geopolitical antecedents factoring into this stand-off included the decrease in American petroleum production post-war and the rise of OPEC, the decision to float world currencies—unpegging them from the price of gold—with the US unilateral withdrawal from the Bretton Woods Accord in 1971 and subsequent recession, plus the never neglected opportunity for proxy warfare between the US and its allies and the Soviet Union on a new frontier. Because the embargo, which lasted until March 1974, failed to change the West’s stance on the Arab-Israeli conflict, history judges it as ineffective despite the long-term effect it had on international economics and gradually over the ensuing decades pushed the US towards more domestic exploration of fossil fuels and towards energy independence and globally pressured reforms for financial institutions to control for inflation.  Intermediate effects included fuel rationing, a slow-down in factory-orders, a shift in preference for smaller automobiles and a pivot towards China for manufacturing.