Question

Discuss how the 1973 Arab-Israeli War and OPEC changed the history of oil pricing and why they imposed an embargo on the United States.

Answer 1

Solution,

In 1973,

Ongoing war Arab countries embargo oil export on those countries which support Israel. Mostly Arab countries as part of OPEC (Organisation of Petroleum Export Countries), initially, it bans Canada, Japan, and Netherlands and United Kingdom and the United States which support Israel after Russia provides help to Arab countries.

Due to the ban on the export of oil OPEC decrease the production and supply of oil and by the end of March 1974, the price of oil has been increased by 400% within a year from $3 to $12(world price). And this increased price create an oil crisis.

Due to the support of the United States toward Israel, they impose an embargo on the United States it removes after March 1974 because in 1970s international payment made in terms of US dollar currency due to the Bretton-wood system and the United States only exporter of US dollar currency.