Introduction:
Petrol and diesel prices have been a subject of concern in recent times, with whispers of a potential 300% increase in 2023. To understand the significance of such a spike, let’s take a step back and revisit the events of 1973 when oil prices soared. Could history repeat itself?
What Happened in 1973?
In October 1973, the world witnessed the Yom Kippur War, as Egypt and Syria, with the support of several Arab nations, launched a surprise attack against Israel. Initially making advances, Israeli forces turned the tide, leading to a series of events. The U.S. chose to back Israel, which, in turn, prompted an oil embargo and production cuts from the Organization of Arab Petroleum Exporting Countries (OAPEC). This caused oil prices to surge by a staggering 300% in a months and 12 times in a year. As a result, the United States faced fuel shortages and a significant increase in gasoline prices, leading to rationing and lower speed limits to conserve fuel.
What USA did?
During the Yom Kippur War, the United States supplied arms to Israel, which infuriated Arab members of OPEC. In response, an oil embargo was imposed on the U.S., Canada, the UK, Japan, and the Netherlands. This embargo extended to other nations supporting Israel. It crippled petroleum supplies, leading to high prices in Canada, Australia, New Zealand, Western Europe, Japan, and the United States.
How the USA and Allies Responded?
The oil embargo had profound effects, prompting the United States and Western European countries to reassess their dependence on Middle Eastern oil. This led to changes in domestic energy policy, including increased domestic oil production and a focus on energy efficiency. The release of the dollar from the gold standard by President Nixon led to financial losses for oil-producing countries, whose revenues were largely in U.S. dollars. Meanwhile, alternative oil sources were being developed globally, and countries began shifting away from oil in favor of coal, nuclear power, and natural gas.
Possibility of 300% Price Raise in Petrol :
The question remains: can we see a 300% rise in oil prices in 2023? While not impossible, it’s essential to consider the changing dynamics of the global oil market. Major oil producers like Saudi Arabia are seeking “constructive relationships” with nations like Israel. Moreover, Iran, which produces only 3% of the world’s crude supply, might not significantly impact global oil prices with an export ban. However, escalating tensions in the Middle East pose a real threat to energy markets, particularly through potential attacks on U.S. or Western oil tankers.
Conclusion:
In conclusion, while history offers a cautionary tale from 1973, the world’s oil landscape has evolved. The possibility of a 300% price increase is not unimaginable, but many factors will shape the future of oil prices in 2023 but the price raise is inevitable if when Iran attacks the oil tankers and it will very badly affect economic condition of largest oil importing nations like India, China US and Japan. Especially, India in which ISPRL maintains an emergency fuel store of total 36.92 million barrels of strategic crude oil equating only for 9.5 days of consumption but Japan held a total of around 484 million barrels of petroleum reserves, equating to 241 days of their consumption !!
PhiGrowth Capital and Consultants 