# Arab Oil Embargo

Background: Oil, Islam, and Jerusalem

To understand the Arab Oil Embargo of 1973-1974 / 1393-1394 AH, one must understand the man at its center: King Faisal ibn Abd al-Aziz of Saudi Arabia. King Faisal was not primarily a political strategist using oil as leverage for geopolitical advantage. He was, first and foremost, a deeply religious Muslim for whom Jerusalem and Al-Aqsa Mosque were matters of personal faith. He had declared publicly and repeatedly that his deepest personal wish was to pray in Al-Aqsa before he died. The Israeli occupation of East Jerusalem following the Six-Day War of 1967 was, for Faisal, not merely a diplomatic problem but a religious wound.

Faisal had warned the Nixon administration directly and repeatedly throughout 1972 and 1973 that continued American military support for Israel — enabling the occupation of Jerusalem and Arab territories — would force Saudi Arabia to reconsider the use of oil as political leverage. These warnings were not taken seriously in Washington. Kissinger and Nixon calculated that Faisal would never act against American economic interests given the depth of the Saudi-American relationship.

They misjudged the depth of Faisal's religious conviction.

OAPEC and the Decision to Embargo

The Organization of Arab Petroleum Exporting Countries (OAPEC) was formed in 1968 by Kuwait, Libya, and Saudi Arabia and later expanded. It was distinct from OPEC (the broader Organization of the Petroleum Exporting Countries, which includes non-Arab states like Iran and Venezuela). OAPEC gave Arab oil states a collective forum for coordinating petroleum policy.

The Ramadan War began October 6, 1973. Within days, the United States launched Operation Nickel Grass — an enormous airlift delivering tanks, aircraft, ammunition, and supplies to Israel, replacing losses sustained in the early fighting. The scale of US support was unmistakable and public.

On October 17, 1973, OAPEC ministers meeting in Kuwait announced an immediate embargo on oil exports to the United States and other countries that had supported Israel, including the Netherlands (which had permitted American aircraft to use Dutch airfields). They also announced a 5% per-month reduction in overall oil production until Israeli forces withdrew from occupied Arab territories and Palestinian rights were restored.

Saudi Arabia, by far the world's largest oil exporter, was the decisive member. Faisal formally committed Saudi Arabia to the embargo on October 20 — the day after Nixon announced a $2.2 billion military aid package to Israel (the "Emergency Security Assistance Act"), which Faisal regarded as a direct act of support for Israeli occupation.

Economic Impact: Oil Prices and the Western Recession

The effect on global energy markets was immediate and dramatic. Before the embargo, the posted price of Arabian light crude oil was approximately $3 per barrel. By January 1, 1974, OPEC (separately from the embargo) had raised the price to $11.65 per barrel — a 400% increase in months.

The United States experienced its worst domestic energy crisis since World War II. Long lines at gas stations became a defining image of the period. The American government implemented emergency rationing measures, odd/even license plate days for fuel purchases, a national speed limit of 55 mph (to conserve fuel), and reduced highway lighting. The economic shock combined with the Watergate crisis made 1973-1974 one of the most turbulent periods in postwar American history.

Western European economies, more dependent on imported oil than the United States, were hit even harder. Japan, which imported nearly all its petroleum, scrambled for alternative arrangements. The embargo contributed to a global recession and a surge of inflation throughout the Western world that persisted for years.

King Faisal's Personal Conviction

The significance of King Faisal's decision cannot be understood without appreciating his personal religious motivation. In numerous interviews and private conversations, Faisal expressed his grief over Jerusalem and Al-Aqsa with an intensity that Western interlocutors often found difficult to comprehend. His statement — "I hope to pray in Jerusalem before I die" — was not a political talking point but an expression of genuine religious yearning.

Saudi Arabia's custodianship of the Two Holy Mosques (Mecca and Medina) placed it at the center of the Islamic world's symbolic geography. The occupation of the third holiest Islamic site by a non-Muslim state — following the arson attack on Al-Aqsa in 1969 — was an injury that Faisal felt as a Muslim leader with particular acuity. His decision to impose the embargo was, in his own understanding, an Islamic duty: using whatever means were available to pressure the powers enabling the occupation of Al-Aqsa.

Faisal was assassinated on March 25, 1975, shot by his nephew Faisal ibn Musaid during an audience. He died without having prayed in Jerusalem. His prayer for Jerusalem remained unfulfilled.

End of the Embargo and Political Lessons

The embargo was lifted on March 18, 1974, following US diplomatic efforts that produced a disengagement agreement between Israel and Egypt (January 1974) and the beginning of Kissinger's shuttle diplomacy. Saudi Arabia concluded, with some justification, that the embargo had moved the diplomatic process and that continued embargo would damage US-Saudi relations without further political gain.

The political lesson absorbed by Western governments and energy planners was clear: Arab oil-producing states had real economic leverage and were willing to use it. The response was a decades-long effort to reduce dependence on Middle Eastern oil through conservation measures, development of alternative energy sources, exploitation of non-Arab oil reserves (Alaska, North Sea), and the establishment of strategic petroleum reserves. These efforts significantly reduced (though never eliminated) Western vulnerability to Arab oil pressure.

The Petrodollar Transformation

The quadrupling of oil prices in 1973-1974 transferred enormous wealth to oil-exporting states. Saudi Arabia, Kuwait, the UAE, Qatar, Iraq, and Libya suddenly possessed revenues beyond anything previously imaginable. Saudi Arabia's oil revenues grew from approximately $4 billion in 1972 to $22 billion in 1974 and eventually to over $100 billion annually.

This wealth — petrodollars — transformed the Muslim world in profound ways. Saudi Arabia invested massively in Islamic institutions: the Muslim World League (Rabita al-Alam al-Islami), the World Assembly of Muslim Youth, the Islamic Development Bank, the King Fahd Complex for Printing the Holy Quran (which has distributed hundreds of millions of copies worldwide), and the funding of mosques, madrasas, and Islamic centers across the world from South Asia to North America to sub-Saharan Africa.

The spread of Saudi-funded Islamic education — predominantly Salafi in theological orientation — altered the religious landscape of Muslim communities globally. Traditional local forms of Islamic practice in Southeast Asia, West Africa, South Asia, and elsewhere encountered a well-funded Salafi alternative. This transformation was a direct downstream consequence of the oil wealth generated by the 1973 price revolution.

The petrodollar funding of Islamic institutions was a double-edged legacy: it dramatically expanded Islamic literacy, Quran distribution, and mosque construction globally, while also spreading a particular theological interpretation that was not always compatible with local traditions. The debate over this legacy continues among Muslim scholars.

OPEC and the Post-Colonial Economic Order

The 1973 embargo marked the moment when formerly colonized or dominated nations seized control of a primary resource that the industrialized world depended upon. OPEC's decision to raise prices unilaterally — outside the framework of Western oil company pricing that had governed global oil markets since the 1920s — was an assertion of economic sovereignty by developing nations that had political reverberations far beyond the oil market.

For Muslim political thought, the embargo demonstrated that collective Muslim economic action was possible and effective. It also raised questions about the relationship between Islamic governance and economic policy that political theorists and jurists have not fully resolved: when is the withholding of trade or resources from non-Muslim states a legitimate Islamic political tool, and what are the criteria for such action?

Legacy

The Arab Oil Embargo of 1973-1974 remains one of the most consequential economic events of the twentieth century. It demonstrated that oil-producing states could use petroleum as a political weapon; it restructured global energy markets; it funded an Islamic institutional expansion whose effects are still being felt; and it temporarily demonstrated the leverage that Muslim-majority states possessed in the international order when they acted collectively on an issue of Islamic significance.

Sources: Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (Simon & Schuster, 1991); Robert Lacey, The Kingdom: Arabia and the House of Sa'ud (Harcourt Brace Jovanovich, 1981); Nadav Safran, Saudi Arabia: The Ceaseless Quest for Security (Harvard University Press, 1985); Yevgenia Albats, The KGB: The State Within a State (1994); Faisal al-Ameri (ed.), King Faisal: His Life and Times (Arabian Studies Series, 1975); Rachel Bronson, Thicker Than Oil: America's Uneasy Partnership with Saudi Arabia (Oxford University Press, 2006); US Department of State, Office of the Historian, The 1973 Arab-Israeli War and the Oil Embargo