THE BIG PAYBACK47and Syria’s Hafez al- Assad to back their attempts to reclaim territory
Israel had seized six years earlier.^9 The Egyptian and Syrian plan included
a clever twist: it sought to impose an economic cost for the continued
US backing of Israel, in the hopes that America might reconsider. Oil,
these heads of state realized, was the best source of leverage the Arab
world possessed. The decision to unsheathe the “oil weapon” was kept
secret. If America intervened on Israel’s behalf, Faisal agreed, Saudi
Arabia would cut oil production and halt exports to America and any
others who backed the Israelis.
On October 6, 1973— Yom Kippur— Egypt and Syria simultaneously
launched surprise attacks, punching into the Israeli- occupied Golan
Heights of Syria and Egypt’s Sinai Peninsula.^10 The Arab armies’ terri-
torial gains were short- lived. As Faisal had feared, America intervened
on Israel’s behalf, flying in $2.2 billion in emergency US munitions on
American planes, which were filmed landing in Israel in broad daylight.
Rearmed, Israel proceeded to rout the two Arab armies and reoccupy
the Syrian and Egyptian land.
As promised, King Faisal channeled Arab outrage and implemented
the embargo. OPEC unilaterally raised prices by 70 percent, and the
seven Arab OPEC states imposed 5 percent monthly production cuts.
Saudi Arabia halted all shipments of oil to the United States. Altogether,
5 million barrels per day were taken off of world markets, which then
were consuming around 45m b/d.^11
The effectiveness of the embargo in driving up prices and wreaking
political and economic havoc is legendary. Nearly two decades of post-
war economic expansion had pushed Free World oil demand to new
heights. At the same time, US oil production was in decline. America
depended on imports for more than a third of its needs.^12 Consumers in
the United States and around the world paid dearly for America’s sup-
port for Israel. The production cuts triggered a huge spike in oil prices
that went far beyond the 70 percent demanded by OPEC. By 1974, mar-
ket forces and panic buying led to a quadrupling of oil prices from around
$3 per barrel in 1973 to $12 in 1974. Prices for oil imported to the United
States stayed above $12 even after the embargo was called off in March
1974 and held roughly constant for the next five years.^13