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This wall will go over what the oil crisis is and some of the many parts playing in!

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During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations. Arab OPEC members also extended the embargo to other countries that supported Israel including the Netherlands, Portugal, and South Africa. The embargo both banned petroleum exports to the targeted nations and introduced cuts in oil production. Several years of negotiations between oil-producing nations and oil companies had already destabilized a decades-old pricing system, which exacerbated the embargo's effects.

The 1973 Oil Embargo acutely strained a U.S. economy that had grown increasingly dependent on foreign oil. The efforts of President Richard M. Nixon's administration to end the embargo signaled a complex shift in the global financial balance of power to oil-producing states and triggered a slew of U.S. attempts to address the foreign policy challenges emanating from long-term dependence on foreign oil.

By 1973, OPEC had demanded that foreign oil corporations increase prices and cede greater shares of revenue to their local subsidiaries. In April, the Nixon administration announced a new energy strategy to boost domestic production to reduce U.S. vulnerability to oil imports and ease the strain of nationwide fuel shortages. That vulnerability would become overtly clear in the fall of that year.

The onset of the embargo contributed to an upward spiral in oil prices with global implications. The price of oil per barrel first doubled, then quadrupled, imposing skyrocketing costs on consumers and structural challenges to the stability of whole national economies. Since the embargo coincided with a devaluation of the dollar, a global recession seemed imminent. U.S. allies in Europe and Japan had stockpiled oil supplies, and thereby secured for themselves a short-term cushion, but the long-term possibility of high oil prices and recession precipitated a rift within the Atlantic Alliance. European nations and Japan found themselves in the uncomfortable position of needing U.S. assistance to secure energy sources, even as they sought to disassociate themselves from U.S. Middle East policy. The United States, which faced a growing dependence on oil consumption and dwindling domestic reserves, found itself more reliant on imported oil than ever before, having to negotiate an end to the embargo under harsh domestic economic circumstances that served to diminish its international leverage. To complicate matters, the embargo's organizers linked its end to successful U.S. efforts to bring about peace between Israel and its Arab neighbors.

Partly in response to these developments, on November 7 the Nixon administration announced Project Independence to promote domestic energy independence. It also engaged in intensive diplomatic efforts among its allies, promoting a consumers' union that would provide strategic depth and a consumers' cartel to control oil pricing. Both of these efforts were only partially successful.

President Nixon and Secretary of State Henry Kissinger recognized the constraints inherent in peace talks to end the war that were coupled with negotiations with Arab OPEC members to end the embargo and increase production. But they also recognized the linkage between the issues in the minds of Arab leaders. The Nixon administration began parallel negotiations with key oil producers to end the embargo, and with Egypt, Syria, and Israel to arrange an Israeli pullout from the Sinai and the Golan Heights. Initial discussions between Kissinger and Arab leaders began in November 1973 and culminated with the First Egyptian-Israeli Disengagement Agreement on January 18, 1974. Though a finalized peace deal failed to materialize, the prospect of a negotiated end to hostilities between Israel and Syria proved sufficient to convince the relevant parties to lift the embargo in March 1974.

The embargo laid bare one of the foremost challenges confronting U.S. policy in the Middle East, that of balancing the contradictory demands of unflinching support for Israel and the preservation of close ties to the Arab oil-producing monarchies. The strains on U.S. bilateral relations with Saudi Arabia revealed the difficulty of reconciling those demands. The U.S. response to the events of 1973-1974 also clarified the need to reconcile U.S. support for Israel to counterbalance Soviet influence in the Arab world with both foreign and domestic economic policies.

The full impact of the embargo, including high inflation and stagnation in oil importers, resulted from a complex set of factors beyond the proximate actions taken by the Arab members of OPEC. The declining leverage of the U.S. and European oil corporations (the "Seven Sisters") that had hitherto stabilized the global oil market, the erosion of excess capacity of East Texas oil fields, and the recent decision to allow the U.S. dollar to float freely in the international exchange all played a role in exacerbating the crisis. Once the broader impact of these factors set in throughout the United States, it triggered new measures beyond the April and November 1973 efforts that focused on energy conservation and development of domestic energy sources. These measures included the creation of the Strategic Petroleum Reserve, a national 55-mile-per-hour speed limit on U.S. highways, and later, President Gerald R. Ford's administration's imposition of fuel economy standards. It also prompted the creation of the International Energy Agency proposed by Kissinger.

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Milestones in the History of U.S. Foreign Relations - Office of the Historian

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stop and think for me!

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Crude Oil in the Products You Use Everyday

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The impact of the COVID-19 pandemic hammered the oil industry in 2020, forcing U.S. oil prices to go negative for the first time on record. In a matter of hours on April 20, the May 2020 contract futures price for West Texas Intermediate (WTI) plummetted from $18 a barrel to around -$37 a barrel.﻿﻿

Oil producers were faced with a glut of crude oil that left them scrambling to find space to store the oversupply. Brent crude oil prices also tumbled, closing at $9.12 a barrel on April 21, a far cry from the $70 a barrel crude oil fetched at the beginning of the year.﻿﻿

While the decline of U.S. oil futures into negative territory was short-lived, the fact that the crush on demand was so swift and volatile leads many to question whether oil can fully recover in 2021. In this article, we review the key factors that impacted oil prices in 2020 and what the experts forecast for oil in the year ahead.

Factors Leading to the 2020 Oil Price Drop

The COVID-19 pandemic triggered an unprecedented demand shock in the oil industry, leading to a historic market collapse in oil prices. Demand for oil cratered as governments around the world shuttered businesses, issued stay-at-home mandates, and restricted travel.

While oil prices started strong in January, by April the impact of reduced economic activity created an oversupply and prices plunged dramatically.

Adding to the freefall in oil prices was the oil price war between Saudi Arabia and Russia, initiated on March 8 after the two countries failed to agree on oil production levels. The month-long price war ended in April when the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to cut overall crude oil production by 9.7 million barrels per day for an initial period of two months starting on May 1. This represented the single largest output cut in history. Oil production would be limited to 7.7 million barrels per day starting on July 1 and running through Dec. 31, 2020.﻿﻿

OPEC's failure to react swiftly to the need to cut oil production to mitigate against lower demand only added to the volatility and price declines the oil industry experienced during the early part of the year. Despite the OPEC agreement to reduce production levels, crude oil prices had reached some of their lowest levels in more than 20 years by May 2020.﻿﻿

The 1st Half of 2020

During the first six months of 2020, market uncertainties persisted for all energy sources, including liquid fuels, electricity, coal, natural gas, and renewables. High levels of inventory forced Brent crude oil spot prices down from a monthly average of $64 per barrel in January to only $18 a barrel in April.﻿﻿

As summer approached, however, the oil markets started to shift as nations began to emerge from lockdown. For the month of June, Brent crude oil spot prices averaged $40 per barrel, an increase of $11 per barrel from May's average.﻿﻿ Production cuts by OPEC and their partner countries (OPEC+) contributed to the decrease in global oil supply and a stabilization of oil prices. In June, OPEC announced they would extend their deepest production cuts through the month of July.﻿﻿

The 2nd Half of 2020

Oil prices continued their rebound from April lows. As the year progressed, market expectations grew that OPEC would continue to limit or delay production increases slated for the following year. As expected, on Dec. 3, OPEC and its partner countries announced they would voluntarily adjust production by 0.5 million barrels per day from 7.7 million barrels per day to 7.2 million barrels per day starting Jan. 2021.﻿﻿

Optimism about the possible rollout of multiple COVID-19 vaccines also buoyed the market. In November, Brent crude oil spot prices increased to an average of $43 per barrel, an increase of $3 a barrel from October's per barrel average.﻿﻿

The Bottom Line

As the global economy attempts a rebound, many industries will likely face headwinds in 2021. Most notably, hospitality, brick-and-mortar retail, and commercial real estate all face obstacles that might ultimately see them adapting their business models to new global realities.

The oil industry also faces headwinds in 2021 and the years ahead. The potential for new lockdowns and ongoing uncertainty surrounding the return of global economic activity could continue to put downward pressure on oil prices in 2021.

Still, the U.S. Energy Information Administration (EIA) expects average oil prices will increase in 2021. This higher forecast is dependent upon two variables that could prove problematic: rising global demand in the coming year and OPEC's commitment to restrained oil production. The EIA forecasts Brent prices will average $49 a barrel in 2021, an increase from the expected average of $43 a barrel in the fourth quarter of 2020.﻿﻿

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The impact of the COVID-19 pandemic hammered the oil industry in 2020, forcing U.S. oil prices to go negative for the first time on record. In a matter of hours on April 20, the May 2020 contract futures price for West Texas Intermediate (WTI) plummetted from $18 a barrel to around -$37 a barrel.﻿﻿ Oil producers were faced with a glut of crude oil that left them scrambling to find space to store the oversupply.

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the shortage strain.

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George C. Scott Public Service Annoucement - Don't be fuelish 16mm psa

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In 1973 Arab Petroleum Exporting Countries proclaimed an oil embargo.

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Oil is used in almost everything we use in one way or another, making the Oil crisis's dramatic and some times hard to handle. will no oil available nothing gets build fixed and the money circle will potentially stop for many things.

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a short and sweat video.

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Of coarse corona has got its hands on everything possible...

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Former BP CEO on what will change in oil industry

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Lord John Browne, executive chairman of L1 Energy and former BP PLC CEO, joins 'Closing Bell' to discuss the state of the oil industry and what needs be to done to make it right.

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Oil crisis, a sudden rise in the price of oil that is often accompanied by decreased supply. Since oil provides the main source of energy for advanced industrial economies, an oil crisis can endanger economic and political stability throughout the global economy.

In the post- World War II period there have been two major oil crises. The first occurred in 1973, when Arab members of OPEC (Organization of the Petroleum Exporting Countries) decided to quadruple the price of oil to almost $12 a barrel ( see Arab oil embargo). Oil exports to the United States, Japan, and western Europe, which together consumed more than half the world's energy, were also prohibited. OPEC's decision was made in retaliation for Western support of Israel against Egypt and Syria during the Yom Kippur War (1973) and in response to a persistent decline in the value of the U.S. dollar (the denominated currency for oil sales), which had eroded the export earnings of OPEC states. With the global capitalist economy already experiencing difficulties, these actions precipitated a steep recession accompanied by rising inflation. This forced capitalist countries to embark on a process of economic restructuring in order to reduce their dependency on oil and prompted fears that the United States might take military action in order to secure free access to its energy supplies. Although the oil embargo was lifted in 1974, oil prices remained high, and the capitalist world economy continued to stagnate throughout the 1970s.

Another major oil crisis occurred in 1979, a result of the Iranian Revolution (1978-79). High levels of social unrest severely damaged the Iranian oil industry, leading to a large loss of output and a corresponding rise in prices. The situation worsened following the outbreak of the Iran-Iraq War (1980-88), which further added to the level of instability throughout the region. In 1981 the price of oil was stabilized at $32 per barrel. By 1983, however, major capitalist economies had adopted more-efficient methods of production, and the problems of the 1970s had been transformed into a relative oversupply of oil rather than a shortage.

Steven Kettell

Learn More in these related Britannica articles:

Arab oil embargo, temporary cessation of oil shipments from the Middle East to the United States, the Netherlands, Portugal, Rhodesia, and South Africa, imposed by oil-producing Arab countries in October 1973 in retaliation for support of Israel during the Yom Kippur War; the embargo on the United States was lifted...

Oil, any greasy substance that is liquid at room temperature and insoluble in water. It may be fixed, or nonvolatile, oil; essential oil; or mineral oil ( see petroleum). A brief treatment of fixed oils follows. For full treatment of edible oils, see fat and oil processing. Fixed oils and fats have the...

World War II, conflict that involved virtually every part of the world during the years 1939-45. The principal belligerents were the Axis powers-Germany, Italy, and Japan-and the Allies-France, Great Britain, the United States, the Soviet Union, and, to a lesser extent, China. The war was...

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oil crisis | Definition, History, & Facts

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Oil crisis, a sudden rise in the price of oil that is often accompanied by decreased supply. Since oil provides the main source of energy for advanced industrial economies, an oil crisis can endanger economic and political stability throughout the global economy.

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Do these examples effect your life style in any way?

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This is a map of some of the major pipelines across Canada.

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I hope that you skimmed over my wall and picked out at least one useful fact on the Oil Crisis and the effect oil has in our day to day lives … everywhere from the clothes we wear too the food we eat oil plays a role in most common days things.