1973 oil crisis

[28] In 1970, President Nasser of Egypt died and was succeeded by Anwar Sadat, a man who believed in the diplomacy of surprise, in engaging in sudden moves to upset the diplomatic equilibrium.

[29] The man largely in charge of American foreign policy, the National Security Adviser, Henry Kissinger, later admitted that he was so engrossed with the Paris peace talks to end the Vietnam war that he and others in Washington missed the significance of the Egyptian-Saudi alliance.

In April 1973, the Saudi Oil Minister Ahmed Zaki Yamani visited Washington to meet Kissinger and told him that King Faisal was becoming more and more unhappy with the United States, saying he wanted America to pressure Israel to return all the lands captured in the Six Day War of 1967.

[34] The fact that Faisal's ineffectual half brother King Saud had imposed a cripplingly oil embargo on Britain and France during the Suez War of 1956 was not considered an important precedent.

[36] In an assessment done by Kissinger and his staff about the Middle East in the summer of 1973, the repeated statements by Sadat about waging jihad against Israel were dismissed as empty talk while the warnings from King Faisal were likewise regarded as inconsequential.

[39] Kissinger promised the Israeli Prime Minister Golda Meir the United States would replace its losses in equipment after the war, but sought initially to delay arm shipments to Israel as he believed it would improve the odds of making peace along the lines of United Nations Security Council Resolution 242 calling for a "land for peace" deal if an armistice was signed with Egypt and Syria gaining some territory in the Sinai and the Golan Heights respectively.

[38] On October 12, 1973, US president Richard Nixon authorized Operation Nickel Grass, a strategic airlift to deliver weapons and supplies to Israel in order to replace its materiel losses,[42] after the Soviet Union began sending arms to Syria and Egypt.

[47] The news about the war on October 16 was grim from the Arab viewpoint with the Syrians steadily being pushed back while Israelis had opened a counter-offensive against the Egyptians and crossed the Great Bitter Lake.

[54] On the afternoon of October 19, 1973, Faisal was in his office when he learned about the United States sending $2.2 billion worth of weapons to Israel, and discussed the issue with two of his closest advisers, Abdullah ibn Abdul Rahman and Rashad Pharaon.

[54] This contributed to a global recession and increased tension between the United States and several of its European allies, who faulted the US for provoking an embargo by providing what many viewed as unconditional assistance to Israel.

"[68] Only on March 18, 1974[69] did the king end the oil embargo after Sadat, whom he trusted, reported to him that the United States was being more "evenhanded" and after Kissinger had promised to sell Saudi Arabia weapons that it had previously denied under the grounds that they might be used against Israel.

[85] The end of what the French called the Trente Glorieuses ("Glorious Thirty" [years]) led to a mood of widespread pessimism in the West with the Financial Times running a famous headline in late 1973 saying "The Future will be subject to Delay".

Saudi Arabia spent over 100 billion dollars in the ensuing decades for helping spread its fundamentalist interpretation of Islam, known as Wahhabism, throughout the world, via religious charities such as the al-Haramain Foundation, which often also distributed funds to violent Sunni extremist groups such as Al-Qaeda and the Taliban.

[95] On January 24, 1974, as the Shah of Iran, Mohammad Reza Pahlavi, was coming off the ski slopes of St. Moritz, he was met by the British Chancellor of Exchequer, Anthony Barber, and the Trade Secretary, Peter Walker.

[99] In 1974, property prices in Riyadh doubled on a weekly basis for the entire year as the prosperity led to a real estate speculation bubble that was often compared to the Klondike gold rush of 1898–1899.

[106] The riots were largely caused by the fact that the low oil prices had forced the Algerian state to end many of its more generous social policies between 1986 and 1988, leading to an unemployment rate of 30% by 1988 along with the knowledge that the FLN regime had stolen millions.

The inability of the USSR to meet energy demand from its allies led those "East European governments to purchase oil from Middle Eastern countries at increasing world market prices, crippling their balance of payments and accentuating their other economic shortcomings.

[136] Through not subjected to the embargo, the UK nonetheless faced an energy crisis of its own—a series of strikes by coal miners and railroad workers over the winter of 1973–74 became a major factor in the defeat of Heath's Conservative government in February 1974 general elections.

[142] In the long run Japan never wavered in its determination to maintain very strong close ties to the United States, while in self-defense briefly providing the Arab powers with the rhetoric they demanded in return for resuming oil shipments in early 1974.

[143] To assure future oil flows, Japan added suppliers outside of the Middle East; invested in nuclear power; imposed conservation measures; and provided funding for Arab governments and the Palestinians.

[149] In December 1974, the North Vietnamese PAVN (People's Army of Vietnam) launched an offensive in the Central Highlands, which far more successful than expected as the ARVN, which was suffering from low morale, put up a feeble resistance.

[152] The strategy pursued by the National Party government since 1948 of sponsoring the industrialization of South Africa was derailed by the "oil shock" with what Skinner described as "important social and political consequences" for the apartheid regime.

[171] According to Peter Grossman, American energy policies since the crisis have been dominated by crisis-mentality thinking, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities.

He wrote that instead of providing stable rules that support basic research while leaving plenty of scope for entrepreneurship and innovation, Congresses and presidents have repeatedly backed policies which promise solutions that are politically expedient, but whose prospects are doubtful.

In 2004, declassified documents revealed that the US was so distraught by the rise in oil prices and being challenged by under-developed countries that they briefly considered military action to forcibly seize Middle Eastern oilfields in late 1973.

Although the Soviet response to such an act would likely not involve force, intelligence warned "the American occupation would need to last 10 years as the West developed alternative energy sources, and would result in the 'total alienation' of the Arabs and much of the rest of the Third World.

The oil embargo was announced roughly one month after a right-wing military coup in Chile led by General Augusto Pinochet toppled socialist president Salvador Allende on September 11, 1973.

After World War II, most West European countries taxed motor fuel to limit imports, and as a result most cars made in Europe were smaller and more economical than their American counterparts.

By the end of the decade, the market had expanded with the introduction of the Ford Fiesta, Opel Kadett (sold as the Vauxhall Astra in Great Britain), Chrysler Sunbeam and Citroën Visa.

A decade after the 1973 oil crisis, Honda, Toyota and Nissan, affected by the 1981 voluntary export restraints, opened US assembly plants and established their luxury divisions (Acura, Lexus and Infiniti, respectively) to distinguish themselves from their mass-market brands.