Oil Embargo
1973-1974 Oil Embargo The oil embargo of 1973 was one of the most significant events regarding the United States macroeconomy. This event was a refusal of Arab countries to sell oil to pro-Israeli countries. The embargo began on October 17, 1973, when the Organization of Arab Petroleum Exporting Countries, or OAPEC, declared they would immediately cut oil production by 5 percent and will continue until Israel withdrew from the West Bank, Gaza, and Jerusalem. Saudi Arabia and Kuwait soon followed when they announced even more production cuts. Soon after, most Petroleum Exporting members also announced they would stop selling oil to the United States until America discontinued support for Israel during the Yom Kippur War (Taylor). The oil embargo lasted for five months, ending on March 17, 1974. There are differing viewpoints regarding the cause of the oil crisis but the impact the embargo had on the United States economy was severe and was a prime example of an important event in history regarding macroeconomic issues.
Many people put the blame on OPEC and the Arab countries for starting the oil crisis. This is due to the fact that they announced their plans for an embargo on October 17, 1973. On October 6, 1973, the Jewish holy day of Yom Kippur, Egypt and Syria carried out a surprise attack against Israel with some assistance from the Soviet Union. The Israelis seemed as if they were going to be defeated but on October 14, 1973, U.S. President Richard M. Nixon responded by ordering a massive airlift of weapons and supplies to Israel, which continued for a full month ( ). Nations of the Middle East were unhappy with the United States’ involvement in the Yom Kippur War. To protest U.S. support of Israel, most of the petroleum-producing nations of the Middle East cut production by five percent (955 ). Some countries completely cut off oil supplies to the United States, which then led to a negative supply shock. According to Krugman and Wells, “The
Many people put the blame on OPEC and the Arab countries for starting the oil crisis. This is due to the fact that they announced their plans for an embargo on October 17, 1973. On October 6, 1973, the Jewish holy day of Yom Kippur, Egypt and Syria carried out a surprise attack against Israel with some assistance from the Soviet Union. The Israelis seemed as if they were going to be defeated but on October 14, 1973, U.S. President Richard M. Nixon responded by ordering a massive airlift of weapons and supplies to Israel, which continued for a full month ( ). Nations of the Middle East were unhappy with the United States’ involvement in the Yom Kippur War. To protest U.S. support of Israel, most of the petroleum-producing nations of the Middle East cut production by five percent (955 ). Some countries completely cut off oil supplies to the United States, which then led to a negative supply shock. According to Krugman and Wells, “The