In 1973 the Arab oil-exporting countries stunned the world by announcing that they were cutting oil production and placing an oil embargo on the United States and the Netherlands. Now, 35 years later, fears about the security of oil supplies are provoking concern that Iran or a similarly hostile country might have recourse to some form of the oil weapon again. However, upon examination of the historical precedent—the use of the oil weapon in 1973 and 1974—it becomes clear that the oil weapon is a blunt instrument that cannot be applied in a focused manner for any sustained period.

The Oil Weapon of 1973-1974

On October 16, 1973, an OPEC committee consisting of the oil ministers of the six Gulf member countries (United Arab Emirates, Iran, Iraq, Kuwait, Qatar, and Saudi Arabia) announced that they would unilaterally increase the posted price of Arabian Light, the marker crude, from US$3.011 per barrel to US$5.119—an increase of 70 percent. This price decision was the first phase of what became known in the developed world as the “oil price shock.”

The next day, the five Arab members of the OPEC committee were joined in Kuwait by the oil ministers of Algeria, Bahrain, Egypt, Libya, and Syria. Although the meeting included all the members of the Organization of Arab Petroleum Exporting Countries (OAPEC), it was not convened as an OAPEC Council of Ministers, but rather as a Conference of Arab Oil Ministers. Indeed, the purpose of the meeting was political rather than economic, and fell outside the OAPEC remit. The ministers were trying to agree on how to use the oil weapon to persuade the United States to reconsider its “blind and unlimited support for Israel” and to force the evacuation of occupied territories.

The October, Yom Kippur, or Ramadan War (which, like the English Channel, has different names depending on which side of the divide one stands) had begun on October 6, 1973. But Arab frustrations with the Israeli refusal to evacuate occupied territories and implement a number of UN resolutions had been deepening even before the war. These frustrations had been aggravated on a number of occasions by perceptions that the United States was perpetually standing behind Israel in total indifference to the Arab plight. The idea that an oil weapon might be used to shake US indifference was introduced in 1971 and 1972, and King Faisal of Saudi Arabia went so far as to issue a warning in a meeting held with top executives of the Aramco parent companies (Exxon, Socal, Texaco, and Mobil) in Geneva on May 23, 1973. The message was that the United States might “lose everything” unless it changed its policy toward the Arab-Israeli conflict. The possibility of a cutback in oil production was mentioned again in subsequent press interviews.

The meeting of the ten Arab oil ministers in Kuwait on October 17 produced, with remarkable speed, a resolution detailing the steps to be taken. Nine countries signed the resolution. Iraq was the only one to decline, as it strongly preferred the nationalization of oil concessions to the use of the oil weapon.

At this meeting, it was determined that the oil weapon would be deployed as follows: the nine signatory countries would reduce their oil production forthwith by at least 5 percent from the actual September 1973 levels, “with a similar reduction to be applied each successive month, computed on the basis of the previous month’s production.” Care would also be taken to ensure that friendly states would not be affected by the reduction. The production cuts would continue until Israel evacuated the occupied territories and the legitimate rights of the Palestinian people were restored.

The decision on the production cut was then modified on November 4. Production cuts were raised to 25 percent below the September level, to be implemented in November. This was to be followed by a further 5 percent reduction in December. The different categories of oil-consuming states were finally set as follows. First, most favored countries would receive their full requirement of oil. Second, preferred countries would be allowed to import “the equivalent of their average imports of Arab oil during the first nine months of 1973 or during the month of September 1973, whichever was greater.” Third, neutral countries’ imports would be reduced by the same rate as the general cutback and by a proportion of the additional amounts supplied to the most favored and preferred countries. Fourth, embargoed countries would receive no supply of Arab oil. These countries included the United States, the Netherlands, Portugal, South Africa, and Rhodesia.

It is immediately clear that such a scheme would be difficult to implement. To cut oil production by a certain percentage is one thing; to reallocate the remaining supplies to importing countries according to four different groupings and a number of criteria is something else altogether. Furthermore, the across-the-board production cuts would cause world oil prices to rise. Indeed this is exactly what happened. The economies of both friends and foes among oil-importing countries were affected. Indeed, the paradox was that friendly oil-importing developing countries were likely to suffer more adverse economic impacts than did the rich industrialized states targeted as foes. In this respect, the oil weapon was—and remains—a very blunt instrument.

Diplomatic pressures and the realization of exaggerated expectations about US willingness and ability to act effectively toward a resolution of the 25-year-old Arab-Israeli conflict began to weaken Arab resolve as early as December 1973. Already at a meeting held in Kuwait on November 19, 1973, the Arab oil ministers had begun to show that they were open to flexibility. They decided not to impose the 5 percent supply reduction scheduled for December on European Economic Community countries (other than the Netherlands) in appreciation of some friendly statements made by the Europeans. A week later Japan and the Philippines, both deemed to be friendly, were exempted.

The notion that the oil weapon was an “instrument of flexible persuasion” turned out to be little more than public relations spin. On December 24 and 25, the 25 percent production cutback rate from the September levels was reduced to 15 percent, and the 5 percent reduction scheduled for January 1974 was abandoned. Meanwhile, Egyptian President Anwar Sadat, who had placed great hopes in his “friend Henry,” as he used to refer to US Secretary of State Henry Kissinger, was persuaded that the lifting of the embargo on the United States would enable US diplomacy to begin working toward the desired goal of the evacuation of occupied territories. President Sadat then made great efforts to convince King Faisal of Saudi Arabia, the leader of the oil weapon initiative, of the merits of lifting the embargo.