Budapest Business School
College of International Management and Business
MA Course in International Relations
The Theory of theInternational Relations and the World New Order
1973 Oil Crisis
The Arab Oil Embargo
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Tamás Szabó
22 December, 2012
Table of Contents
1. Introduction – historical ,economical background………………………………………………...3
2. OPEC………………………………………………………………………………………………...4
3. The economic impact of the embargo…....................................................................................5
4. Effects on international relations…............................................................................................7
3. Conclusion – “Don’t be Fuelish”….............................................................................................9
Introduction
In the 1970s, oil was still selling for about three dollars a barrel, having risen less than two percent per year in the previous three decades. During that time the value of the US dollar had been based on gold. Other western currencies were based on the dollar. But in 1971 the United States went off the Gold Standard, eventually resulting in a sharply devalued dollar. Because oil was priced in dollars, oil producers began receiving less value for the same price. Something had to give. But it took a crisis to set off the eventual chain reaction.
Egyptian and Syrian forces launched a coordinated attack against Israel hoping to win back territory lost to Israel during the third Arab-Israeli war. On October 6, 1973, the Jewish holy day of Yom Kippur, Egyptian forces attacked Israel from across the Suez Canal, while Syrian troops flooded the Golan Heights. Thus began the so-called “Yom Kippur War.” Taking the Israeli Defense Forces by surprise, Egyptian troops swept deep into the Sinai Peninsula, while Syria struggled to throw occupying Israeli troops out of the Golan...