First Oil Shocks: James E. Akins As US Ambassador To Saudi Arabia

First Oil Shocks – Background

The first oil shock began in 1973 when the members of the Organisation of Aran Petroleum Exporting Countries announced an oil restriction. This restriction was announced to support Israel during the Yom Kippur War. This oil Shock affected the Oil price of so many nations. The primary countries targeted at that time were Netherlands, Japan, Canada, United State, Portugal, South Africa, Rhodesia. At the end of this declaration the following year, the price of oil had risen from US$3 per barrel to nearly $12 nationwide. This declaration caused a massive Oil Crisis that affected so many countries’ economy and policies. This crisis was later called “First Oil Shock”.

Price of Oil

The effect of the unexpected increase in the price of oil can reduce the Purchasing

For example, the US oil production also started to decline, exacerbating the embargo’s impact. Followed by this incident, Nixon called James E. Akins as US Ambassador to Saudi Arabia to audit US production capacity. The confidential results were alarming as there was not enough space to store production and for that reason production could only be restricted by decreasing quantity produced.

Second Oil Shock – Background

The Second Oil Shock occurred in 1979 due to a decrease in oil output in the wake of the Iranian Revolution, even though global oil decreased by -4%. The price of crude oil was more than double to $39.50 per barrel over that year and oil was available in gas stations as they had in the 1973 oil crisis.

In 1980, following the outbreak of the Iran-Iraq war, oil production in Iran nearly stopped., and Iraq’s oil production was severely cut as well. Economics recessions were triggered in the United States and other countries. Oil prices did not subside to pre-crisis levels until the mid-1980s.

Price of