The OPEC Oil Price Shock of 1973

When the Organization of Arab Petroleum Exporting Countries (OAPEC) countries, led by Saudi Arabia, declared an oil embargo in October 1973, the 1973 oil crisis also known as the first oil crisis began. Targets of the embargo were countries that had backed Israel during the Yom Kippur War. Although the embargo was later expanded to Portugal, Rhodesia, and South Africa, the initial countries targeted were Canada, Japan, the Netherlands, the United Kingdom, and the United States. The price of oil had increased by about 300% by the time the embargo ended in March 1974, going from US$3 per barrel ($19/m3) to almost $12 per barrel ($75/m3) globally; US prices were much higher. The embargo caused an oil crisis, or "shock", with many short- and long-term effects on global politics and the global economy. It was later called the "first oil shock", followed by the 1979 oil crisis, termed the "second oil shock".

For the nations in northern Europe and the Persian Gulf that export oil, the price decline created a significant issue. Countries with high populations and low incomes, such as Mexico, Nigeria, Algeria, and Libya, whose economy depended heavily on oil, failed to plan for a market turn that left them in often hopeless positions.

Midway through the 1980s, when a global market was oversupplied due to decreased demand and rising supply, oil prices crashed, and the cartel disintegrated. The economies of Mexico (a non-member), Nigeria, and Venezuela, all of which had experienced economic growth in the 1970s, were on the verge of collapse, and even Saudi Arabia's economic might was severely diminished. Consolidated action was made more challenging by the disagreements within OPEC. OPEC's dominance has never come close to it as of 2015.