What was the 1970s oil crisis, and are we heading for something worse?
The month-long closure of a crucial waterway for the global energy supply has sparked warnings that the world may be facing problems more severe than those experienced during the 1970s oil crisis.
Lars Jensen, a shipping expert and former director at Maersk, told the BBC that the impact of the US-Israeli war on Iran could be
"substantially larger"than the economic turmoil witnessed in the 1970s.
His remarks come after a warning from Fatih Birol, director of the International Energy Agency, earlier this month stating that the world is
"facing the greatest global energy security threat in history".
Birol added,
"It is much bigger than what we had in the 1970s, the oil price shocks. It is also bigger than the natural gas price shock we have experienced after Russia's invasion of Ukraine,"he told the BBC.
However, while the closure of the Strait of Hormuz disrupts global supplies, some experts argue that today's world is more resilient.
What happened in the 1970s oil crisis?
The 1970s oil crisis was
"fundamentally different"from current events, as the initial oil shock then was
"the result of a deliberate policy decision,"according to economist Dr Carol Nakhle, who is also the chief executive of Crystol Energy.
In October 1973, Arab oil producers imposed an embargo on a group of countries led by the US due to their support for Israel during the Yom Kippur war. This embargo was accompanied by a coordinated reduction in oil production.
"The result was a near quadrupling of oil prices within a few months,"Nakhle explained.
This led to fuel rationing in major oil-consuming nations and triggered a
"global economic and financial crisis"with lasting effects.
Dr Tiarnán Heaney, a researcher at Queen's University Belfast, noted that high oil prices fueled inflation across many sectors,
"meaning businesses cut back further and unemployment soared."
"This had massive knock-on effects that damaged the social fabric of many countries with widespread strikes, unrest, and increases in poverty as many households struggled to make ends meet,"he said.
Both the US and UK experienced recessions lasting from 1973 to 1975, with the crisis contributing to the downfall of Ted Heath's Conservative government in 1974.
What is happening in the current oil crisis?
Since the US and Israel initiated their conflict with Iran a month ago, the narrow Strait of Hormuz has effectively been closed to shipping traffic.
This has disrupted the flow of oil, gas, and other essential commodities from Gulf states, which typically export about one-fifth of the world's oil supply.
US President Donald Trump has employed various strategies to restore Gulf oil flow, including urging allied nations to deploy warships as escorts and threatening to intensify actions against Iran if it does not allow safe passage through the strait.
Jensen, now leading the consultancy Vespucci Maritime, told the BBC's Today programme that much of the oil that left the Gulf over a month ago is still arriving at refineries worldwide, but that flow is expected to cease soon.
"So the oil shortages we've been seeing, they're only going to get worse, even if magically the Strait of Hormuz would re-open tomorrow,"he said.
"We will face massive energy costs — not just while this crisis goes on but also for six to 12 months after it's over."
Could the current crisis get worse than the 1970s shock?
Nakhle, who also serves as secretary general of the Arab Energy Club, stated that the oil market today is more diverse than in the 1970s, and overall consumption has decreased significantly.
She believes that although current prices are elevated, the present crisis is not as severe.
"While the volumetric disruptions we are seeing are significant - arguably among the largest in recent history - the market is far more resilient than in the 1970s,"she said.
"It is more diversified, less oil-intensive, and better equipped with buffers and emergency response mechanisms."
Joel Hancock, director of commodities research at Natixis CIB, highlighted another key difference: the 1970s crisis targeted developed countries, which had the financial resources and political capacity to manage it.
The current crisis primarily affects developing countries,
"who lack the institutions and monetary and fiscal robustness to manage the crisis well,"he added. Hancock also noted that collateral damage to energy infrastructure was not a factor in the 1970s crisis, but it is currently.
He stated that today's crisis
"will only end once the war de-escalates."
Heaney pointed out some factors working in the world's favor today, such as improved economic understanding and more countries maintaining oil reserves.
"The main risk is that the crisis becomes prolonged, then future expectations become much more bleak,"he added.
"The best-case scenario is to end this conflict as quickly as possible and restore some semblance of stability."
