Oil Crisis due to Russia Ukraine Conflict like Oil Shock of 1973: French Finance Minister

Paris/Moscow/London: – French Finance Minister Bruno Le Maire warned that the flare-up in the oil rates following the Russian attack on Ukraine and its consequences are similar to the Oil Shock of 1973. The French Finance Minister warned that the global economy could slow down given the situation created in the oil market. The current rate of oil in the international market is $110 per barrel, and it is predicted to flare up to $150 per barrel soon.

French Finance Minister Bruno Le Maire warned, ‘The crisis created in the oil market because of the Russia-Ukraine war. Its intensity and consequences are similar to the first major jolt delivered to the fuel market in 1973. In 1973, inflation had flared up given the decisions taken by the oil-producing countries. The central banks were forced to increase the interest rates. The economic growth came to a grinding halt and recession crept in.’

The French Finance Minister also warned this recession has to be averted. In October 1973, Egypt and Syria had attacked Israel. This war is known as the Yom-Kippur War. During this war, the oil-producing countries banned crude oil exports from delivering a jolt to the countries assisting Israel in the war. This resulted in a 300% increase in the rates of crude oil. This instance is referred to as ‘Oil Shock’ or ‘First Oil Crisis’.

The western countries have started imposing harsh sanctions to hit Russia in the Russia-Ukraine war. Last week, the United States and the United Kingdom announced a ban on fuels imported from Russia. Pressure is being exerted on other countries not to import crude oil and fuel gas from Russia. Russia is the third-ranked country in the international oil market. Therefore, repercussions of the ban on Russian fuels are becoming apparent in the fuel sector.

The oil rates have reached record levels within fifteen days of starting the war. Crude oil rates reached $130 per barrel and settled with a minor correction. The natural fuel gas rates have reached $2,000 per thousand cubic metres. Russia has warned that the crude oil rates will flare up to $250 to $300 per barrel. Taking this background into account, the comparison made by the French minister of the current situation with the Oil Shock becomes significant.

Meanwhile, former US President Donald Trump has targeted President Joe Biden over the oil ban issue. Trump made vitriolic criticism that President Biden has tied down the US fuel sector and is begging with countries like Saudi Arabia, Iran and Venezuela for oil.