The Opec Oil Embargo In

The first of these crises resulted from the October 1973 Arab oil embargo, when Arab member countries of OPEC cut off oil imports to the United States and other Western nations because of their support for Israel during the Arab-Israeli conflict known as the Yom Kippur War. A simultaneous quadrupling of oil prices—the outcome of a concomitant OPEC decision to use its oil price-setting leverage to its advantage—compounded the crisis. It immediately became clear that overdependence on oil from Middle Eastern countries put the United States in a vulnerable position. The embargo lasted until March 1974 and left Americans idling for hours in long lines at gas stations to buy gas that was four times as expensive as it had been just six months earlier.

IRANIAN REVOLUTION IN 1979 In 1979 another oil crisis occurred, again in the wake of political instability in the Arab world, this time because of a change in Iranian leadership. The troubles were rooted in a 1953 change in leadership: Mohammad Reza Pahlavi had assumed power as the shah of Iran in 1953 after the overthrow of the Iranian prime minister Mohammad Mossadegh with the help of the U.S. and British governments. Whereas Mossadegh's oil policies had been antagonistic to the United States and Britain (he had nationalized the oil industry), Pahlavi was an American-friendly leader who opened Iranian oil reserves to Western companies. However, in 1979, Islamic fundamentalists who resented his pro-Western policies drove him out during the Iranian Revolution. A new Islamic republic emerged, based on fundamentalist Islamic principles and led by the national spiritual leader, Ayatollah Khomeini. This new regime reduced oil exports and raised the price of oil. Saudi Arabia and other OPEC nations increased their oil production in response, but Americans, for whom the 1973-74 oil crisis was still a fresh and bitter memory, panicked. The United

States experienced a widespread panic-driven oil demand, which drove the price of oil even higher and caused more long lines at the gas pumps.

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