1970s Oil Crisis vs 2026. The Next Black Swan?
The 1970s saw two linked oil shocks. The 1973-74 Arab Oil embargo and the 1978-80 second oil shock centred on the Iranian Revolution. Together, they ended the postwar era of cheap oil. Here ' s a nice youtube vid for historical context.
Figure 1: Oil shock 1973-74( https:// www. federalreservehistory. org / essays / oil-shock-of-1973-74)
Before the crisis, the industrial economies had become heavily dependent on oil, especially imported oil. At the same time, oil exporters had gained more leverage over pricing, non- OPEC supply had become relatively less dominant, and the weakening U. S. dollar reduced the real value of oil revenues because oil was priced in dollars. That meant the world economy was unusually exposed even before the shocks hit.
What happened in 1973 – 74
The first shock began during the Yom Kippur War in October 1973. After the United States moved to resupply Israel, Arab oil exporters imposed an embargo on the U. S.; Arab OPEC members also targeted other countries seen as supporting Israel, including the Netherlands, Portugal, and South Africa. At the same time, production cuts were introduced, so this was not just a diplomatic gesture but a real supply squeeze. The immediate price effect was huge. Oil rose from about $ 2.90 a barrel before the embargo to $ 11.65 by January 1974,