From 1973 Oil Shock to Iran War: Biggest Disruptions in Global Oil Supply

The closure of the Strait of Hormuz has triggered what the International Energy Agency (IEA) calls the largest disruption in global oil markets in history, with supply expected to drop by roughly eight million barrels per day in March, about 8% of global output.

In response, IEA member states have agreed to release a record 400 million barrels from strategic reserves to stabilize prices and offset lost Middle Eastern production.

Cargo ship struck by a projectile in the Strait of Hormuz

This crisis adds to a long history of shocks that have repeatedly rattled global oil markets. Below is a review of the most significant supply disruptions in history:

The 1973–1974 Arab Oil Embargo

The October 1973 Yom Kippur War, when Egypt and Syria launched a coordinated attack on Israel, ignited the Arab oil embargo. The Organization of Arab Petroleum Exporting Countries (OAPEC) immediately cut production by 5%, with monthly reductions of an additional 5% to pressure Western nations into pressuring Israel to withdraw from territories occupied since 1967.

U.S. National Security Council documents revealed that the embargo threatened to cut American supply by 2–3 million barrels per day, with total losses in affected countries reaching 4.5 million barrels per day. Prices quadrupled from $2.90 per barrel to $11.65 by January 1974, prompting the U.S. to ration fuel, boost domestic production, and establish emergency energy legislation. The crisis also led to the creation of the International Energy Agency in 1974.

The 1978–1979 Iranian Revolution

The 1978–1979 Iranian Revolution

Political upheaval in Iran toppled Shah Mohammad Reza Pahlavi and brought Ayatollah Ali Khamenei to power, reducing Iranian oil output by 4.8 million barrels per day, roughly 7% of global supply, by January 1979. Prices began a sharp ascent mid-year, more than doubling between April 1979 and April 1980 amid speculative hoarding and robust global demand.

The crisis fueled U.S. inflation, leading to the appointment of Paul Volcker as Federal Reserve Chair in August 1979, who implemented strict monetary tightening to curb runaway inflation. The twin forces of oil shock and monetary policy triggered a severe recession in the United States.

Gulf Crisis 1990–1991

Saddan Hussein. Photograph Source: Public Domain

Iraq’s invasion of Kuwait and the subsequent UN sanctions removed approximately 4.3 million barrels per day from world markets. Iraq had been producing 3.1 million barrels daily, exporting 2.7 million, while Kuwait contributed 1.8 million barrels, exporting 1.7 million, together accounting for nearly a third of Gulf output. Brent crude spiked from $17 per barrel in July 1990 to $36 by October, before stabilizing after the war ended in February 1991.

The IEA implemented coordinated emergency measures, releasing 2.5 million barrels daily within 15 days, including two million barrels from reserves, 400,000 through demand restrictions, and 100,000 from fuel-switching programs.

Hurricanes Katrina and Rita, 2005

The Aftermath of Hurricanes Katrina and Rita

Hurricanes Katrina and Rita severely disrupted U.S. Gulf of Mexico oil production. Katrina halted 1.38 million barrels per day at its peak on August 29, 2005, with Rita compounding the outage to 1.53 million barrels per day by September 26. The U.S. Department of Energy released 9.1 million barrels from the Strategic Petroleum Reserve, complemented by a coordinated 30 million barrel IEA release.

Russian Invasion of Ukraine, 2022

Russian Invasion of Ukraine, 2022

Russia’s full-scale invasion of Ukraine triggered a global energy crisis. European nations moved swiftly to reduce dependence on Russian oil and gas, causing prices to surge over 50% within weeks. Brent crude reached its highest level since 2008. In March 2022, the Biden administration authorized a release of 180 million barrels over six months to counter the price spike while capping Russian oil export prices to limit war financing.