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A Moment From History

As OPEC meets tomorrow to discuss increasing the price of a barrel of oil (several members lose money at current levels), I think its important to remember that this is the 35th anniversary of the Arab Oil Embargo.

According to a report released by the IMF Monday on the Economic Outlook for the Middle East and Central Asia, the following are the break even levels on spending for oil exporting countries. If oil is less these price levels, the respective country’s income could fall short of its spending:

Iran = $90
Bahrain = $75
Oman = $77
Iraq = $111

I was looking for a good summary of the origin of the embarge and found this at Gregor.us:

In October 1973, OPEC ministers were meeting in Vienna when Egypt and Syria (non-OPEC nations) launched a joint attack on Israel. After initial losses in the so-called Yom Kippur War, Israel began beating back the Arab gains with the help of a U.S. airlift of arms and other military assistance from the Netherlands and Denmark. By October 17, the tide had turned decisively against Egypt and Syria, and OPEC decided to use oil price increases as a political weapon against Israel and its allies. Israel, as expected, refused to withdraw from the occupied territories, and the price of oil increased by 70 percent. At OPEC’s Tehran conference in December, oil prices were raised another 130 percent, and a total oil embargo was imposed on the United States, the Netherlands, and Denmark. Eventually, the price of oil quadrupled, causing a major energy crisis in the United States and Europe that included price gouging, gas shortages, and rationing.

You may want to check out this video as well (copy/paste into your browser):

http://dailynightly.msnbc.com/2006/10/real_to_reel_li.html

Mark