The Effects Of The Unstable Relations Between The Organization Of Arab Petroleum Exporting Countries And The United States Of America After The 1973 Oil Crisis

Introduction

The ongoing Arab-Israeli conflict that began after the land that was formerly known as Palestine, had been taken away to create a Zionist state known as Israel that declared its independence on May 14, 1948, has lead to many different kinds of events between Arab countries and Israel in the past and until the day today.

One of the events that had become a huge issue in the past was the oil crisis in 1973, which will be the main issue on how and why it caused the unstable relationship between the United States of America and the Organization of Petroleum Exporting Countries.

This paper will try to outline and describe why the oil crisis of 1973 happened and if there where any other factors apart from the embargo on the United States of America done by the members of Organization of Arab Petroleum Exporting Countries (OAPEC), that caused the United States of America to go into the period of experiencing a economic crisis in 1973. And the effect it had on the relationship between the United States of America and the Organization of Arab Petroleum Exporting Countries (OAPEC) that became unstable after the oil crisis of 1973.

Background

But in order to understand the main cause of the oil crisis, the history must be known first. It was caused by the fact that Arab states refused to acknowledge Israel as an independent state, so the Arabs began to launch efforts to recapture the land that they felt was rightfully theirs. This created the Suez-Sinai War in 1956, where Britain and France where sided with Israel in order to punish President Nasser of Egypt for nationalizing the Suez Canal. As the strong Israeli military was able to quickly defeat the Arabs, the Arabs responded by uniting with other Arab countries to try and defeat the Israelis, what was called the Six-Day War in 1967, but it made the Israeli being able to claim much more land, and force the Arabs to retaliate. However this established the Organization of Arab Petroleum Exporting Countries also known as the OAPEC, aimed to separate oil production and sale from politics to try and avenge the Israelis. In 1973 on Yom Kippur which is the holiest Jewish holiday was also the month of the holy month of Ramadan for Moslems, the Arabs attempted to overwhelm the state of Israel in what was known as the Yom Kippur War or the Ramadan War, that created the unstable relations between the Organization of Arab Petroleum Exporting Countries (OAPEC) and the United States of America, as the United States of America were aiding the Israelis by deploying shipments with firearms during the Six-Day War and the Yom Kippur War.

So in retaliation the Arab members of the Organization of Petroleum Exporting Countries (OPEC); also referred as the Organization of Arab Petroleum Exporting Countries

(OAPEC) began placing oil embargoes

on the United States, Western Europe, and Japan that caused what is known for the Oil Crisis in 1973 as a part of the Yom Kippur War.

As the Arab-Israeli conflict has caused much tension to the Arab countries and Israel, countries and organizations that are in support of them has also suffered the impact of the conflict. Such as the United States of America, who were clearly in favour of supporting the Israelis, by aiding them with firearms during the Six-Day War and the Yom Kipper War.

By the time the Israelis were about to lose the war the United States of America flew US $ 2.2 billion worth of arms and ammunition to Israel aboard its giant C5 Galaxy planes. This airlift brought around 22,000 tons of tanks, artillery, helicopters and ammunitions to Israel over a one-month period and involved more than 560 attacking expedition by military aircraft. This was the biggest operation since the airlift to Berlin after the end of World War II .

So in retaliation the members of the Organization of Arab Petroleum Exporting Countries (OAPEC); which was an organization that was created on January 9th 1968 by three of the most conservative Arab oil states, Kuwait, Libya and Saudi Arabia who agreed in Beirut to establish the organization, to separate oil production and sale from politics to avenge the past Six-Day War, by using the oil as a weapon. The Organization of Arab Petroleum Exporting Countries (OAPEC) was part of the Organization of Petroleum Exporting Countries (OPEC) which principal aim, according to its Statute, was to determine the best means for safeguarding their interests, individually and collectively;

devising ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations; giving due regard at all times to the interests of the producing nations and to the necessity of securing a steady income to the producing countries; an efficient, economic and regular supply of petroleum to consuming nations, and a fair return on their capital to those investing in the petroleum industry."

This retaliation on the United States of America for supporting the Israeli was led by King Faisal of Saudi Arabia, with the Organization of Arab Petroleum Exporting Countries (OAPEC) members Kuwait, Iraq, Libya, Abu Dhabi, Qatar, and Algeria that they would cut their production below the September level 1973 by 5% for October 1973 and an additional 5% per month to pressure the United States of America, until the restoration of Israel's occupation of the Arab territories occupied in June 1967 would be returned to the legal rights of the Palestinian people. The retaliation of using the embargo was seen as a political tactic, seeing that they were able to use the embargo for economic revenue, because once the embargo was successful against the Western countries; particularly the United States of America who felt the immediate impact of the embargo as investors and oil companies were panicking from the rapid increase of the oil prices, because in the United States of America at that time, the price of oil would rise four times or in other words quadrupled, from the 25 cents to over a dollar in just a couple of months. The Arab members of the Organization of Arab Petroleum Exporting countries (OAPEC) was able to keep the prices high and make a larger profit once they had resumed the shipments of oil with an inflated price of oil.

Identification of the Problem

By the beginning of the year 1974, the interdependency from oil-importing nations in the non-communist industrial world saw sudden inflation and economic depression, such as the United States of America who was in a period of feeling the pressure of the immediate impact of