Forty years ago today, the Organization of the Petroleum Exporting Countries (OPEC) voted to raise the posted price of their oil by 70 percent. The next day, several Arab oil producers decided to impose an embargo on oil sales to the United States to punish it for supporting Israel in the unfolding Yom Kippur War. While the two decisions were not formally linked, policymakers have worried ever since that OPEC could again restrict the global supply of oil.
A lot has changed since 1973. Oil embargoes used to happen fairly frequently: There was one in 1956, and another in 1967. Until 1973, they didn’t attract much attention. But due to structural changes in the oil market in the early 1970s, the one in 1973 had a huge impact. Since that time, there hasn’t been a single international embargo. (The current sanctions against Iran are an importers’ boycott, not an exporters’ embargo.) What happened?