Oil

• Vital to western economy, US produces oil, but Middle East produces more, especially Saudi Arabia; high oil prices were good for producers’ economies
• Realised in 1970s this could be used as a weapon against West; controlling supply led to shortages in West, plus rocketing prices which devastated economies
• Arguably, caused end of post-war prosperity in Britain: for example, inflation rose to about 25% 1975
• OPEC; Organisation of Petroleum Exporting Countries (1960): Saudi Arabia persuaded Iran, Iraq, Kuwait, Venezuela, Qatar, Libya, Algeria to form OPEC (1960); accounted for 90% of oil exports outside communist world, made oil companies consult OPEC before changes
• 1967 War: Six-day War closed Suez Canal until 1975, oil tankers extended routes and europe faced oil shortages; Saudi Arabia financed PLO post-Israeli occupation (1967)
• Impact on west: Saudi Arabia imposed complete oil embargo on USA and Netherlands, call end of Israeli occupation, reduced oil output by 25%, december oil price quadrupled, Europe and Japan hardest hit (75% oil from Middle East)
• Embargo is lifted: March 1974, Americans convinced Israel to withdraw military from Suez and Saudi Arabia lifted embargo, were allowed to buy advanced military equipment (from US) and Arab oil states gained independence from Western oil companies