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. …