Middle East war sends economic tremors across the globe

IT IS now half a century since the major energy shock from the Middle East in the early 1970s, which ended some 25 years of uninterrupted growth for the global oil industry. This crisis rattled big energy firms and sparked a major shock that rocked the global economy.

Fast-forward 50 years, and analogies to the 1970s are surfacing. The current crisis will likely have key economic and political implications well beyond the Middle East, including Asia, even with Opec+ countries announcing last weekend that they will increase output by over 206,000 barrels per day from April.

Alan Gelder, senior vice-president at Wood Mackenzie, asserts that the nearest historical parallel is the early 1970s Middle East oil embargo by Arab oil-producing nations in response to US support for Israel during the Yom Kippur War. This saw oil prices nearly quadruple in less than a year.