First oil crisis

The first Oil crisis occurred in 1973; its effects will be felt until in 1978.

The 16 and October 17th 1973, during the War of Kippour, the Arab countries members of OPEC, then joined together with the Kuwait, announce a Embargo on the deliveries of Pétrole against the States “which support Israel”.

Their claims relate to:

  • spectacular increase in the price of the crude and more precisely the quota of this price returning to the “producing States”,
  • the absolute control of the levels of the production in order to maintain a price “artificially” high crude,
  • the increasing participation, on behalf of these countries, with the operations of production involving the progressive disappearance of the crude returning to the concessionary companies (known as “gross of concession” ) with the profit of the crude which returns to the “State host” (known as “gross of participation” )

Course of the facts

The Saudi Arabia then carries out 21% of the crude world exports. The king Fayçal, however friend of the Americans, deplores their unconditional support for Israel which endangers according to him the moderated Arab modes, amongst other things that of Sadate in Egypt. At the time of the War of Kippour, Richard Nixon supplies in armament the Hebrew State reduced to the defensive, vis-a-vis the attack égypto-Syrian woman supplied by the Soviets. In answer, the countries of the Gulf increase unilaterally, without the agreement of the companies, of 70% the posted price of the crude barrel.

The October 17th 1973, the representatives of the oil Arab countries (OPAEP) put aside the Iran, joined together with Kuwait, decide a monthly reduction of 5% of the oil production until evacuation of the occupied territories and recognition of the rights of the Palestinians. The October 20th, Fayçal decides a total embargo on the deliveries intended for the United States, then with the Netherlands. The price of the barrel on the open market passes from 3$ to 18$ in a few weeks. At the end of December, the countries of OPEC reunify the price of the barrel with 11,65$. Between the month of October 1973 and the month of January 1974, the price of the barrel of the crude of reference which is the light Arab , is quadrupled, passing from 2,32$ to 9,00$. In this price, the “producing State” takes, into 1973,2,09 USD/baril and 8,7 USD/baril in January 1974 is more than 4 times.

The shortage causes a kind of panic; the prices continue their vertiginous rise: they quadruple following the increases in October and December. The consumer countries react in a disordered way, seeking to draw their pin from the play. The International agency of energy (IEA), created on this occasion, is not able to establish a certain order and they are the large companies themselves which are charged to distribute the rationing in an equal way while exploiting the Arab and nonArab sources of supply.

Certain Arab countries wish a reduction of the production to maintain the prices with the rise. But the United States refuses this prospect. They try to constitute an international trust of consumers vis-a-vis OPEC but fail because of the opposition of the France. To be opposed to any reduction production, the United States is ready to intervene militarily in the Arabic peninsula to take the control of the principal oil-bearing fields. In the absence of an intervention, they are laid out to make to Iran the gendarme of the Persian Gulf.

After the Arab Life top of Algiers (26 - November 28th 1973), the United States must modify their policy considered to be too favorable to Israel, just like Western Europe and Japan. The March 18th 1974, Sadate obtains the lifting of the embargo.

The following year, king Fayçal is assassinated by a nephew, sunken of the United States.

Long-term result

In fact, OPEC will not find any more one such level of power on the economic plan and policy and the posted objectives of the embargo will not be achieved. The policies of improvement of the energetic efficiency are set up as from this moment as well as the diversification of the energy sources, France, for example developing a massive programme of constructions of nuclear plants.

See too

Internal bonds

External bonds

  • History of the course of oil

Random links:Sharon Osbourne | Field of Reeb | Andrew D. Weyman | Exit TV | Tro Bro Leon | Lenborough