And then the energy resources were used for political pressure
The Soviet budget was literally bursting with money
A loss for some is a gain for others
In October 1973, after the Arab oil-exporting countries decided to stop the supply of “black gold” to the countries that supported Israel in the Yom Kippur War, a world crisis occurred. Instead of 3 dollars per barrel, oil becomes 25. In the West, factories stop due to lack of fuel, and people are forced to give up their personal cars. In the long run, developed countries face a decline in industrial production, rising inflation and unemployment.
Against the general background, the king of the situation turns out to be the USSR. By rapidly increasing oil supplies abroad, the country receives the necessary currency for economic growth. Thanks to foreign money, investments are made in renewing the long-lasting assets of the industry, mass purchases of technologies from the West begin, construction is intensified. Rivers of consumer goods flow into the Union and there is unprecedented abundance.
The Soviet budget is literally bursting with money, but what amounts are we talking about? In the early 1970s, the USSR occupied a very modest position in the oil market. In 1972, the total income of oil exporters was $23 billion. The Soviet Union then sold abroad “black gold” for only about 1.47 billion dollars. Its market share barely exceeds 6%, which does not allow it to dictate terms. The rules of the game were determined by Middle Eastern suppliers, who by 1973 provided up to 66% of oil supplies.
At that time, the countries of the Middle East already had experience with political pressure through energy resources. True, failed. In 1967, Iraq, Kuwait, Algeria, and Bahrain imposed an oil embargo on the United States, the United Kingdom, and Germany, and Syria halted exports entirely in an attempt to persuade its adversaries to withdraw their support for Israel in the Six-Day War. But in the end, the adventure brought only losses, as the Americans and their allies quickly managed to overcome the restrictions with the help of third countries.
However, thanks to this experience, the countries of the Middle East are already better prepared for the war of 1973. In 1968, on the initiative of Kuwait, Libya and Saudi Arabia, the Organization of Arab Petroleum Exporting Countries (OAPEC) was founded, which also includes Algeria, Bahrain, Egypt, Iraq, Qatar, Syria, Tunisia and the United Arab Emirates. Now they have the opportunity for more coordinated action.
During the Yom Kippur War, OPEC countries not only embargoed the UK, Canada, USA and Japan, but also cut oil production by 5% until a formula was found to resolve the conflict. At the same time, in order not to affect the welfare restrictions, the Arab countries increase the export prices of the “black gold” at once by 70%.
The blow delivered by the “oil weapon” turns out to be accurate and, most importantly, dangerous. Gradually the restrictions were extended to the Netherlands, Portugal, Denmark, Rhodesia and South Africa. Since in Europe only the Dutch port of Rotterdam manages to receive tankers, other countries of the Old World are also affected by the “shock wave”: in fact, the entire European market is left without “black gold”. Fuel stocks in the US are rapidly dwindling, and the price of oil has reached $25 per barrel. OAPEC further cut production by 25%, and at the end of the year, increases “black gold” by another 128%.
“This day can be considered the date of the end of the “era of cheap oil” in world history,” says Olga Skorokhodova, candidate of historical sciences. Even after the end of the crisis and the lifting of restrictions in March 1974, the “black gold” quickly rose in price, and by 1979 its price exceeded 35 dollars per barrel. (more than $100 adjusted for inflation).
The new reality
The new reality partly surprised the USSR. The export of energy resources is not the main source of income for the country, and most of its oil infrastructure can meet the domestic needs of the Soviet bloc countries. The passage of “black gold” through the Druzhba oil pipeline, built in 1964, which connects the deposits of the Volgoural region with Hungary, Czechoslovakia, Poland, the GDR and other countries, begins. The capacity of the first line built is 30 million tons per year, which is not was sufficient in the late 1960s. The throughput capacity of the pipeline must be more than doubled to 66.5 million tons by building a second branch. Extracting more oil in a short time is also a problem. The grandiose project to develop fields in Western Siberia is barely gaining momentum, other resources are sufficient only to solve momentary problems.In order to free up at least some quantities of oil for export, the Soviet authorities take drastic measures to reduce domestic consumption: from 8 to 40 kopecks per liter they increase prices retail prices for the most widely used A-76 gasoline, fuel oil and diesel fuel rose significantly.Thus, the main bet during the oil crisis of 1973 was made in on the re-export of raw materials. In quantitative terms, supplies of “black gold” from the USSR abroad increased from 66.8 million tons in 1970 to 119 million in 1980.