What was the 1970s oil crisis, and are we heading for something worse?

A temporary blockage of a vital maritime route for global energy has raised alarms about a potential crisis more severe than the 1970s oil shocks. Lars Jensen, a shipping expert and former Maersk director, warned the BBC that the US-Israeli conflict in Iran could lead to impacts far greater than the economic turmoil of the 1970s. His remarks came after Fatih Birol, head of the International Energy Agency, declared earlier this month that the world is “facing the greatest energy security threat in history.”

“This situation is far more significant than the oil price shocks of the 1970s, and even larger than the gas price surge following Russia’s invasion of Ukraine,” Jensen stated.

While the closure of the Strait of Hormuz has disrupted oil and gas flows, some argue today’s global systems are more adaptable. Dr. Carol Nakhle, CEO of Crystol Energy and Arab Energy Club secretary general, emphasized that the 1970s crisis was “fundamentally different” from current events. She noted that the initial oil shock of 1973 resulted from a deliberate embargo by Arab producers, targeting the US and its allies during the Yom Kippur War.

“The Arab oil embargo led to a quadrupling of prices within months, causing widespread fuel rationing and a global economic and financial crisis,” Nakhle explained.

Dr. Tiarnán Heaney, a Queen’s University Belfast researcher, highlighted the broader consequences of those high prices. “Inflation skyrocketed, forcing businesses to scale back and increasing unemployment,” he said. “This destabilized societies, leading to strikes, unrest, and rising poverty as households struggled with rising costs.”

During the 1970s, the US and UK experienced recessions from 1973 to 1975, with the crisis contributing to the collapse of the Conservative government led by Ted Heath in 1974. Now, the ongoing conflict in the Strait of Hormuz has cut off a major portion of Gulf oil exports, which supply roughly 20% of the world’s oil. Despite efforts by Donald Trump to secure passage, Jensen predicted that even if the strait reopened, “oil shortages will intensify, with costs escalating for months after.”

“The market today is more diversified, less reliant on oil, and better prepared with emergency reserves,” Nakhle added.

However, Joel Hancock of Natixis CIB noted a key distinction: the 1970s crisis primarily affected developed nations, which had financial and political resources to manage it. By contrast, the current disruption targets developing economies, which “lack the institutional strength and fiscal stability to handle the fallout effectively,” he warned. Additionally, damage to energy infrastructure is now a critical factor, unlike in the past.

Heaney acknowledged improvements in global resilience, citing better economic insights and increased oil reserves in multiple countries. Yet he cautioned that prolonged instability could still pose a major risk. “If the crisis drags on, the long-term effects may be even more damaging,” he said.