OPEC and the Oil Crisis of the 1970s: An Example of economic interdependence

1
OPEC and the Oil Crisis of the 1970s An
Example of economic interdependence

• Mr. Reiter Pd.7
• Group 6b
• Amber Gutierrez
• Ana Maria Peralta

2
What is OPEC?

• It Is the Organization of Petroleum Exporting
  Countries
• The nations that makes up the OPEC is Iran,
  Kuwait, Saudi Arabia, and Venezuela. Later on
  more nations became members.
• The OPEC are those that has oil in their
  territory and controls it to sell to other
  countries.

3
The Formation of the OPEC

• The Arab nations became more independent as they
  found out that they had reserve oil which gave
  them a great deal of influence in the world.
• The oil producing nations were able to regulate
  both the rate of production, and the price of
  oil.
• This ability gave the Arab members of the OPEC a
  powerful weapon to be used against Israel and the
  US and allies who supported them.

4
Arab Nations VS Israel

• The Arab Nations refused to recognize Israels
  right to exist.
• When Israel was recognized by the UN in 1948, the
  two sides engaged in frequent wars.
• In one of the wars, the Six-Day war in 1967, the
  5 surrounding Arab nations attacked Israel. In
  the 6 days of fighting Israel captured Egypts
  Sinai Peninsula, Syrias Golan Heights, Jordans
  West Bank, and the Jordanian half of the city of
  Jerusalem.

5
Continuation

• After capturing many territories Israel offered
  to return them if and only if the Arab nations
  signed a peace treaty that recognizes Israels
  right to exist.
• The Arab nations refused to do so, and the
  conflict has simmered on as a series of border
  raids and terrorist bombing attacks, which in
  result killed many innocent people.

6
Yom Kippur War

• In October 1973 the hostilities between the Arab
  nations and Israel broke out into another
  full-scale war.
• The war was called the Yom Kippur War, because
  the Arabs attack the Israelis on the holiest
  Jewish holidays.
• The Israelis managed to get an upper hand
  because of weapons and equipment supplied by
  their ally the US.

7
The Arabs Reaction

• Once the Arab nations realized that they could
  possibly be defeated by Israel they came up with
  a new idea to weaken them economically.
• They decided to limit or cut off oil supplies to
  Israel, the US or other countries that were
  Israel allies.

8
Continuation

• The Arabs plan to cut off oil supplies proved to
  be very effective. Almost all the industries
  depended on oil as a source of fuel, gas for
  cars, trucks, airplanes, home heating oil, and
  the production of electricity from oil-fired
  generators.
• Due to the Arabs oil embargo the worlds economy
  was severely damaged.

9
United States Response

• The US realized with a shock how much it relied
  on out side sources of oil.
• They began to take steps to cut its oil use by
  conservation measure.
• They also began to use alternative fuels which
  still to this day has only limited success.

10
Continuation

• To prevent the Arabs from imposing more embargoes
  the US leaders began to work harder to promote
  peace talks between the Arabs nations and Israel.
• They also tried to be more even-handed in its
  relations with Arab nations.
• The policy of the US towards the Middle East has
  been one of careful diplomacy.

11
Summary

• The OPEC was formed from oil producing countries
  in the Middle East.
• Tensions between OPEC and Israel caused them to
  cut off oil supplies to Israel and their allies
  including the US.
• The oil crisis was affecting the US severely so
  they decided to take action to talk peace among
  Arabs and Israel.