February 1974… Peggy Galgano, an 18-year-old nursing student in the small town of Pleasantville near New York, had to return to college. She came to Pleasantville because of her mother’s ill health, but due to the 1973 oil crisis, there was a shortage of oil and gas in America. She took the car and set out in search of a gas station, but was unsuccessful. Peggy told the New York Times that stations used to turn off the pumps as soon as they saw a queue of trains. After 53 years, the same situation has returned all over the world, this time also the reason is Israel and America… oil and gas shutdown. Rising inflation and echo of explosions in war. Is this time the oil crisis bigger than the 1973 crisis? What happened 53 years ago? Let us understand in the explainer…

Question 1: What exactly was the 1973 oil crisis and why did it start?

answer: It was the year 1973, when the Oil Exporting Organization of Arab Countries (OPEC) had imposed a complete oil embargo on America and its allied countries. The reason was the Yom Kippur War. In this war, Egypt and Syria attacked Israel to regain the areas lost in the Six-Day War of 1967. At that time, America gave emergency aid of 2.2 billion dollars to Israel, due to which the Arab countries got angry and stopped the supply of oil.

In the 1970s, the Middle East produced 50% of the world’s oil. OPEC reduced production by 5% every month and banned America, Netherlands, Portugal and South Africa. outcome? Global supply decreased by 4.5 million barrels per day (bpd), i.e. about 7% of the total supply at that time.

Question 2: How much did oil prices increase in 1973 and what was the impact on the world?

answer: In 1973, oil prices had increased four times in a few months. In America, one barrel went from $3 to $12, which is around $80 today. Petrol stations dried up. Fuel rationing was imposed in America, speed limits were reduced and daylight saving time was kept throughout the year.

Europe and Japan were also badly affected by the oil crisis. Three-day work week started in Britain, driving on Sunday was banned in Europe. Inflation increased, industrial production fell and many countries fell into the grip of stagflation i.e. inflation and recession. There was recession in America and Britain from 1973-75.

At that time there was no direct ban on India, but the impact was very deep. India’s oil import bill was 414 million dollars in 1973, which increased to 1,350 million dollars in 1974, i.e. three times. A four-fold increase in prices created a storm of inflation; railway workers organized the biggest strike of two million workers in May 1974.

The government sought help from the World Bank and IMF, but there were conditions. All this created a hostile environment. Jayaprakash Narayan’s movement set Bihar on fire and finally on June 25, 1975, Indira Gandhi’s government imposed emergency in the country.

Question 3: What is today’s global oil crisis in 2026 and is it different from 1973?

answer: In March 2026, America-Israel started war on Iran. Iran closed the Strait of Hormuz, through which 20% of the world’s oil and gas passes. As a result, the supply of 20 million barrels of oil daily was stopped.

There was a shortage of 4.5 million barrels in 1973, today there is 20 million less, that is, four times more supply shock. The price of Brent crude crossed $66 to $100 per barrel. The International Energy Agency (IEA), formed after the 1973 oil crisis, has said that this is ‘the biggest energy security threat in history’.

IEA has asked its 32 member countries to withdraw 400 million barrels of oil from the strategic reserve, but experts say that if the war continues for a long time, gas, diesel and jet fuel will all become expensive.

Question 4: Why does today’s crisis seem more dangerous than that of 1973?

answer: The supply shock today is bigger than in 1973. Kiel Institute economist Klaus Jürgen Gern says that in the 1970s the supply had decreased by only 5%, today it has decreased more. Shipping expert Lars Jensen says, ‘The impact could be much bigger than in the 1970s.’

Yet prices did not quadruple because:

• Today the oil market is more diversified (OPEC’s share dropped from 50% to 36%).
• America is the largest oil producer today and added 90% of new oil to the global supply in the last decade.
• The world has a record reserve of 8.2 billion barrels.
• The market expects the war to end in a few weeks.

In 1973 no one knew when the ban would be lifted, so prices remained high for a long time.

Question 5: What impact can the crisis of 2026 have on India and Asia?

answer: India is still a heavy oil importer. Like 1973, the import bill will increase and inflation will occur. The countries of Asia, which import oil, will be most affected, but there will be no political upheaval like in 1973 because today there are reserves, energy efficiency is high and some sanctions on America-Russia-Iran are being temporarily removed.

The crisis of 1973 was a deliberate policy and lasted a long time. The crisis of 2026 is the result of war. Supply shock is big, but reserves and diversification have kept prices under control for now. If the war ends quickly, there will be no long recession like 1973, but if the oil infrastructure is damaged, it could lead to global inflation, industrial slowdown and a new crisis of energy security, especially in India and Asia.

1973 taught the world how dangerous oil dependence is. The same lessons are being repeated in 2026, but now with reserves, American production and faster response mechanisms. Still, the closure of the Strait of Hormuz is a reminder that the Middle East is still the world’s oil pipeline.