From Kommersant, April 1, 2026, p. 1. Condensed text:
The current turmoil in the oil and gas market is reminiscent of the events of 1973-1974, when Arab OPEC member countries imposed an embargo on oil supplies to Western nations in retaliation for their support of Israel in the Yom Kippur War against Egypt and Syria. This triggered an energy crisis in the West, which also affected [the USSR]. The reasons are different now, but the result might turn out to be somewhat similar.
OPEC’s share of the oil market in 1973 was 56%, which allowed it to dictate terms. (Currently, the share of OPEC+ is estimated to range from 40% to just over 50%, but the share of the Gulf countries directly affected by the crisis is around 30%. That’s still a lot.) At that time, the embargo caused oil prices to spike sharply – from $2.90-$3.00 per barrel to $11.60-$12.00 per barrel. At current prices, that’s roughly [equivalent to a change] from $22 to $88. A fourfold increase was extremely painful, especially since no one was even thinking about energy efficiency back then. Huge cars roamed the roads of America, and the average fuel consumption was 18 liters per 100 kilometers. In the US, inflation immediately rose to about 8.7%, and unemployment rose to 9%. Gross domestic product fell by 4.2%, while gasoline prices more than doubled. The fuel shortage led to restrictions on gasoline sales; at some gas stations, purchases were capped, for example, at 10 gallons per customer. In January 1974, the US adopted a nationwide speed limit of 55 miles per hour.
The Netherlands banned Sunday driving in private vehicles. In the UK, speed limits were also lowered and street lighting was reduced. France imposed restrictions on heating in public and residential buildings.
At that time, the crisis exposed the vulnerability of a growth model based on cheap energy. And it was precisely then, in response to the crisis, that Western countries began developing energy conservation and energy diversification programs – including initiatives to promote nuclear power – and oil exploration in the North Sea also began. That was also when the Japanese automotive industry began to take off, thanks to the production of more fuel-efficient models. As a precaution, Western countries began building up strategic oil and gas reserves. In the short term, they found themselves in a severe crisis, but they learned their lesson.
For the USSR, the short-term consequences of the oil embargo were, on the contrary, beneficial, but they also led to a sense of complacency. By the mid-1970s, oil already accounted for up to 50% of total foreign exchange earnings, and by 1980, the share of hydrocarbons in exports – including gas – had reached about 80%. The Soviet Union significantly strengthened its position as a key supplier of energy resources to Eastern Europe and as an alternative (to Arab countries) in supplying Western Europe (gas pipelines to West Germany and other European countries came into service).
A “gold rush” of foreign currency poured into [the USSR] – and that was when we became addicted to oil, abandoning the tentative economic reforms that had begun in the early 1970s (self-financing, cost accounting and other innovations designed to improve the efficiency of the planned economy). Why change anything when everything is fine as it is? The increase in revenue made it possible to afford imports from Western countries. Stores began stocking previously unheard of Finnish and Austrian women’s boots along with other European clothing and footwear, Yugoslavian furniture, and grocery items such as Finnish Cervelat sausage and Viola cheese.
The first warning signs for the USSR emerged as early as the early 1980s, as oil prices began to fall. The sharp blow came in 1985-1986, when world prices plummeted from around $32-$35 to $10-$12 per barrel (from $96-$105 to $30-$36 in today’s dollars). The Soviet Union was forced to reduce preferential energy supplies to the socialist countries, which exacerbated their economic difficulties and triggered social unrest. The foreign exchange shortage complicated the implementation of perestroika, exacerbating the systemic crisis of the late 1980s and ultimately leading to the collapse of the Soviet economy. Of course, the drop in oil prices wasn’t the only cause of the crisis. But it served as a powerful catalyst for existing structural problems.