this ppt has a brief of crisis 1973 with the history and some major effects ,with the photo an animatios

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OIL PRICE HIKE IN 1973

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INTRODUCTION
The world consumes about 76 millions barrels per day of oil and OPEC accounts
for nearly 60% of world’s proven oil reserves & its exports represent 55% of the
oil traded internationally.
India ranks among the top 10 largest oil consuming countries. India’s oil reserves
are deficient and it imports nearly 70% of its total oil consumption from the OPEC
countries.
The 1973 oil crises began in October 1973 when the member of the Organization of Arab
petroleum Exporting Countries, proclaimed an oil embargo.
By the end of the embargo in March 1974, the price of oil had risen
from $3 per barrel to nearly $12.

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OPEC
IRAQ
KUWAIT
UN
ARAB LIBYA
SAUDI
ARAB
The Organization of the Petroleum Exporting Countries (OPEC), which then
comprised 12 countries, including Iran, seven Arab countries
About OPEC Countries
Qatar

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OPEC was organized to resist pressure by the "Seven Sisters" (seven
large oil companies, mostly owned by U.S., British, and Dutch
nationals) to reduce oil prices and payments to producing countries

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It prohibits nation that had supported Israel in its “Yom
Kippur War" with Egypt, Syria and Jordan from buying
any of the oil it sells.

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What did happen ?
Who?
OPEC would decide the price and amount of oil.
What?
President Nixon showed his support of Israel by giving
them $ 2.5 billion worth of arms
Where?
Contrary war between the three countries.
Who
What
When
Where
What
Result
When?
Contrary roots took place & it was called "oil
diplomacy" on October 17, 1973.
What?
OPEC nations retaliated against those nations supporting
Israel by putting an embargo on oil shipments
Result
the price of gasoline shot way up as its supply went down,
leading to shortages

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Macroeconomic Effects
 The price of oil products increase 400%: from $2.59 to $11.65 a barrel.
 The quadruple increase in oil price lead to inflation in consuming countries.
 Western nations’ central banks decided to sharply cut interest rates to
encourage growth.
 This leads to searching for renewable sources of fuel.

8. INTRODUCING NEW RULES IN AFFECTING
COUNTRIES
• Limit on refuel of oil up to 10 liter
/person.
• Speed limit on roads .
• There was a shortage of gas in all over
countries due to stop in supply.

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USA European c Sweden Netherlands Japan
Effect on countries to countries
Emergency Highway
Energy
Conservation Act
Governments ban
flying, driving and
boating on Sundays
Government rationing
of gasoline and heating
oil
Government imposes
prison sentences for
using more than given
rations for electricity
Industries shift from
oil-focused to
electronics

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• India ranks among the top 10 largest oil- consuming countries
Oil crisis affects India’s economy
• Oil accounts for about 30% of India's total energy consumption
• Now India imports about 70% of its total oil consumption and
makes no exports.
• This naturally would create a supply deficit, as domestic oil
production is unlikely to keep pace with demand.
• An IMF report says that among the oil importing countries, the largest impact
on GDP growth and the balance of payments is expected to be felt in India,
Korea, Pakistan, Philippines, Thailand, and Turkey

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Balance of Payments due to oil imports
• Although the entire burden of the spike in price has not been passed to the
domestic consumer, the Indian government's finances have taken a
sufficient hit, affecting the macroeconomic outlook in India.
• India, as a result, will experience deterioration in its balance of
payments, putting downward pressure on exchange rates
• Ultimately, imports would become more expensive and exports less
valuable, leading to a drop in real national income.

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Thank you….
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