1973 Arab Oil Embargo
After the US provided emergency aid to Israel during the Yom Kippur War, Arab oil producers led by Saudi Arabia imposed a total embargo on the US and key allies. OPEC raised prices from $3 to nearly $12 per barrel. US price controls worsened domestic shortages, creating gas lines and rationing.
The US economy contracted 2.5% and entered a severe recession. The embargo ended in March 1974 after US-brokered disengagement agreements, but prices remained elevated.
The crisis permanently shifted global energy politics, spurring Western investment in non-OPEC oil, the creation of the Strategic Petroleum Reserve, and long-term efforts to reduce oil dependence.
The 1973 embargo demonstrated how energy weapons cut both ways—producers gained leverage but also incentivized alternatives. The G7 price cap attempts the inverse: using consumer leverage to set prices while avoiding the supply disruptions that plagued 1970s-era embargoes.