Event 07 · History as decisions
The embargo that showed how much depended on one supply
In October 1973 Arab oil producers cut supplies and stopped exports to the United States, oil prices nearly quadrupled within months, and importing countries rushed to reduce their dependence.
- The 1973 oil crisis
- Middle East, United States and worldwide
- 1973
- 3 min read
On this page
Before you readWhat would you do?
Your small company runs all its customer support through one AI chatbot service. The provider announces a large price increase next month. What should you have done earlier, and what should you do now?
Pick an answer now. The file tells you whether you were right.
01The file in one minute
1The cut
In October 1973 Arab oil producers cut output and stopped exports to the United States.
2The shock
Oil rose from about $2.90 a barrel to about $11.65 by January 1974, causing queues and recessions.
3The response
Countries built oil reserves, set fuel economy rules and formed the International Energy Agency.
4The lesson for AI
Relying on one AI tool or provider with no backup is a supply risk. Keep a tested alternative.
02Timeline
October 1973
Arab oil producers cut production and stop exports to the United States.
January 1974
Oil reaches about $11.65 a barrel, nearly four times its earlier price.
March 1974
The embargo on the United States is lifted, but prices stay high.
1974 to 1975
The International Energy Agency is formed, and the US plans a strategic oil reserve.
03What happened
In October 1973, during the Yom Kippur War between Israel and Egypt and Syria, the Organization of Arab Petroleum Exporting Countries began cutting oil production. After the US announced emergency aid to Israel, they also stopped oil exports to the United States, and later to some other countries.
The price of oil rose from about $2.90 a barrel before the embargo to about $11.65 in January 1974, according to the Federal Reserve's history of the period. In the United States there were long queues at petrol stations, and many economies slid into recession with high inflation. The embargo was lifted in March 1974, but prices stayed high.
Countries responded in different ways. The US set fuel economy standards for cars and built a strategic oil reserve. Several importing countries formed the International Energy Agency in 1974, and Japan and others invested in energy efficiency and other energy sources.
04The decisions that shaped it
The crisis exposed a risk that had built up quietly: rich economies depended heavily on cheap oil from a few suppliers, and they had little spare stock or backup. Once supplies were cut, there was no quick way to replace them. The lasting decisions were about spreading that risk: storing reserves, using less and finding other sources.
The AI angle: depending entirely on one AI tool or provider is a similar risk. If its price jumps, its rules change or it stops working, a business with no backup can stall.
The idea behind this caseLesson: Choosing a model →

05What to take from it
- List the things your work depends on that come from a single supplier.
- Keep a backup option ready, and test that it actually works.
- Hold some reserve, such as stock, savings or a spare tool, for sudden shortages.
- Use resources efficiently, so a price rise hurts less.
07 — Sources
- Oil Embargo, 1973–1974 · US Department of State, Office of the Historian · 1973
- Oil Shock of 1973–74 · Federal Reserve History · 2013