Oil weapons have been uncovered again: the “fuel” aspect of the conflict in Israel

Fifty years ago, another tragedy broke out in the Middle East. On October 6, 1973, Egypt and Syria attacked Israel. The fourth Arab-Israeli war began, which in Egypt is called the “October”, and in Israel – the “Yom Kippur War”. As is known, at first the Arab armies, having achieved surprise, successfully attacked. The Egyptians crossed the Suez Canal and, having inflicted heavy losses on Israeli tank and air units, recaptured part of the Sinai Peninsula occupied by their neighbors in 1967. The Syrians broke through to the Golan Heights, again occupied by Israel during the Six-Day War. But on October 15, the Israelis launched a crushing counterattack and, in turn, crossed the Suez Canal and approached 40 km to Damascus.

For the second time since the Cuban Missile Crisis of 1962, the entire world found itself on the brink of nuclear war. The USSR and the USA, each supporting their allies, brought nuclear triads to full combat readiness. At the last moment, the global catastrophe was stopped. On October 25, a truce was signed, which then pushed Egypt and Israel to conclude a peace treaty in 1979.

Western media and the expert community are confident that the main “firefighter” was Henry Kissinger, who in the fall of 1973 held two key positions in Richard Nixon’s administration: assistant to the president for national security and secretary of state. Indeed, he managed to agree on a de-escalation of the conflict on October 20 in Moscow.

However, one should not discount two more world leaders who could directly influence the favorable outcome of what seemed in those days an intractable confrontation between Israelis and Arabs. We are talking about the head of the Libyan Jamahiriya, Muammar Gaddafi, and King Faisal bin Abdulaziz Al Saud, who ruled Saudi Arabia from 1964 to 1975.

A brief background that predetermined their actions on the world stage.

In mid-September 1973, a price drama played out at the OPEC conference in Vienna. According to agreements between OPEC countries and American and British oil companies dated February 14 in Tehran and April 20, 1971 in Tripoli, crude oil prices could increase by a maximum of 5 cents per barrel. In September 1973, a barrel pulled only $2.9. The governments of Arab countries are tired of such defiantly unfair dynamics of quotations. In addition, they did not like Washington’s support for Israel. King Faisal’s attempts to negotiate with Nixon came to nothing.

Therefore, the oil ministers of OPEC member countries requested a price increase of 70%. The Americans agreed to only 15%. True, at the same time, members of the board of directors of the Saudi Arabian company Aramco (then it was 80% owned by four American oil companies) called on Nixon to distance himself, at least a little, from Israeli Prime Minister Golda Meir. The American president, of course, verbally called for a peaceful solution to the Middle East problem, but in reality he only strengthened support for Tel Aviv.

On the evening of October 6, all participants in the Vienna conference were, as journalists assured then, in complete shock. No one expected war, including the American and Israeli intelligence services.

The Arab oil ministers could not even return to their overlords. The skies over the Middle East were closed. An Indian airline helped, taking them by a roundabout route to Kuwait. There, on October 16, the Arabs and Iranian Oil Minister Jamshid Amuzegar agreed to urgently raise the price of oil by 70% – to $5.11 per barrel. In fact, this is exactly the price that has already developed on the world market as a result of panic. The next day, Arab ministers, without their Iranian counterpart, agreed to reduce production by 5% to the September level and continue to do this monthly until the United States stops supporting Israel. At the same time, one of the documents stated the possibility of declaring a complete oil embargo.

King Faisal still preferred not to drive the horses. He either received American directors of Aramco or sent trusted ministers to Washington. But then it became known that a month before the Yom Kippur War, the king promised Egyptian President Anwar Sadat money and the uncovering of oil weapons. However, Faisal’s way back was cut off by Muammar Gaddafi, who declared the US oil embargo on October 19. In the next three days, Saudi Arabia, Kuwait, Algeria and Iraq joined this decision (then, however, Baghdad secretly supplied oil to the enemies of the Arabs). In November, Arab OPEC countries decided to increase monthly production cuts to 10%. And the embargo was extended to the Netherlands, Portugal, Southern Rhodesia (now Zimbabwe) and South Africa.

As a result, by the end of 1973, oil prices quadrupled to September values ​​- to $11.65 per barrel (at today’s exchange rate – $95). In the United States, fuel shortages began at gas stations. Naturally, Texas oil saved us from complete collapse. But in Holland, gasoline and diesel fuel simply disappeared for a while. I had to change horses. Other European countries also experienced difficulties, since Rotterdam was the continent’s largest fuel hub.

In general, the Western economy, which at that time was overly dependent on oil, suffered one of the most severe crises. For example, in the United States, already high inflation (8% in 1973) accelerated to 12% per annum in 1974.

Having achieved peace negotiations, King Faisal lifted the embargo on March 18, 1974. Gaddafi was unhappy and came out of the embargo much later.

The results of the oil war of 1973–1974 can be assessed in different ways. But one thing is clear: for the first time, oil weapons were used in such an effective way, although the Arabs were unable to achieve a military victory over Israel, despite a number of initial successes.

Riyadh then repeatedly used oil weapons, including against the USSR, which became addicted to the oil needle after the Arab embargo. In 1986, under pressure from Washington, as well as to support the Afghan Mujahideen, King Fahd ibn Abdul-Aziz ibn Abdulrahman Al Saud lowered the price to $10 per barrel (in 1985 it was $35).

Many researchers believe that it was precisely because of the collapse of oil prices that the USSR collapsed. However, the Union budget in 1984 was made up of only 10.2% of oil and gas revenues. In 1990 – by 4.7%. For comparison: in 2023, the federal treasury, despite the sharp deterioration in the market situation, will be filled with hydrocarbon taxes by almost a third. And Russia is not going to disintegrate at the same time.

In the 21st century, oil weapons have become blunted. Firstly, the United States has regained its global leadership in production through shale deposits. Secondly, oil and its products have replaced alternative “green” energy sources. In the West they even predicted that by the middle of the century oil would be completely removed from the energy sector. True, the latest forecasts from both OPEC and its Western alternative, the International Energy Agency, indicate that oil consumption will still be quite high in 2040. Global demand will exceed 116 million barrels per day. Which is 16 million more than now. However, this will be achieved at the expense of the global South, and not the West, as in the 20th century.

In 2015, when oil prices once again collapsed threefold – from $123 per barrel in February 2012 to $40, people in the West started talking about the complete defeat of OPEC. However, Russia suddenly entered the fray on the side of Saudi Arabia. In 2016, the OPEC+ alliance was formed, which immediately began a series of production restrictions. Now this policy continues. By October 4, 2023, another, but still tactical, victory was achieved. Quotes after the summer fall to almost $70 rose to $95. But then they quickly retreated to $85. Traders were informed of the possible conclusion of a peace treaty between Saudi Arabia and Israel, against the backdrop of which the Saudis would sharply increase production.

But it didn’t happen. Israeli Ambassador to Russia Alexander Ben Zvi bluntly stated on October 9 that the unexpected brutal attack by Hamas on October 7 was primarily explained by an attempt to disrupt the Saudi-Israeli peace treaty. Whether this is so is not entirely clear. But one thing is clear: the oil weapon in the world has once again been uncovered.