A look back at the Arab-Israeli War of 1973 and global oil price shock

Fifty years ago on 6 October, a war erupted in the Middle East, reshaping not only the region but also the global landscape. This war goes by several names, depending on one's perspective: the October War, the Yom Kippur War, the Ramadan War, or the 1973 Arab-Israeli War.

The ultimate victor of the war is just as disputed, reports Al Jazeera. 

The war began with a dual-pronged attack against Israel by Egypt and Syria. Egypt launched its offensive from the south with the aim of reclaiming the Sinai Peninsula, while Syria attacked from the north to regain control of the Golan Heights. 

Israel had captured both territories six years earlier in the 1967 Arab-Israeli conflict, alongside occupying what was left of historic Palestine.

At that time, Israel was riding high on the success of its previous victory and had not anticipated an assault of this magnitude, particularly on Yom Kippur, a sacred day in the Jewish calendar. 

Meanwhile, the geopolitical dynamics of the Cold War loomed in the background, with the Soviet Union supplying weapons to the Arab nations and the United States firmly backing Israel. This placed the two superpowers on the brink of military confrontation for the first time since the Cuban Missile Crisis of 1962.

It wasn't until October 16, a full ten days after the war's commencement, that Israeli forces managed to breach the Egyptian and Syrian defensive lines, significantly altering the course of the conflict. Subsequently, the fighting reached a stalemate.

The oil embargo

Twelve days into the conflict, the oil-producing Arab nations, united under the Organization of Petroleum Exporting Countries (OPEC), made the pivotal decision to reduce oil production by 5%. 

Israel suffered significant casualties and material losses during the fighting against Egypt and Syria. On 18 October, it requested $850 million worth of American arms and equipment to replace their lost resources.

However, US President Richard Nixon chose to take massive action, exceeding the initial request. Instead of providing $850 million in arms, he sought approval from Congress for a staggering $2.2 billion worth of arms to be sent to Israel, a request that was promptly granted.

This move greatly angered King Faisal of Saudi Arabia, leading him to retaliate on 20 October by imposing a complete embargo on oil shipments to the United States. This decision was supported by all major oil-producing Arab nations, except Iraq and Libya.

The embargo put the US in a state of urgency, prompting them to seek resolutions to the conflict. Former US national security adviser Henry Kissinger stepped in as a mediator, engaging in "shuttle diplomacy" between Cairo, Damascus, and Tel Aviv in a bid to broker peace between the Arab and Israeli factions.

Kissinger's efforts proved successful, culminating in a ceasefire agreement that brought an end to the war.

The consequences of the embargo were immediate and far-reaching. OPEC pressured oil companies to significantly raise their payments, causing the price of oil to quadruple by 1974, surging from $3 to nearly $12 per 42-gallon barrel. This price hike had substantial global economic repercussions.

The embargo was accompanied by gradual monthly reductions in oil production. By December, production had plummeted to just 25% of September levels, contributing to a worldwide recession and straining relations between the United States and several European allies. The allies blamed the US for instigating the embargo by providing what many saw as unconditional support to Israel. 

The embargo was lifted in March 1974, following negotiations during the Washington Oil Summit. However, its effects continued to linger throughout the 1970s, leaving a lasting impact on global politics and economics.

A few years later, on 17 September 1978, Egypt and Israel took a significant step toward normalisation by signing the Camp David Accords, which outlined the conditions for an Egyptian-Israeli peace treaty. 

This normalisation with Israel was an outcome of the war, and a second attempt by Arab states to wage war against the Israeli occupation and restore the rights of Palestinians never materialised.