The 1973 Playbook: What Governments Do During Oil Shocks — And What India Is Already Doing

Last Updated:May 11, 2026, 19:13 IST

The last time the global economy faced such a shock was in 1973, when an oil embargo by Arab producers triggered a fourfold spike in prices.

The current crisis, fuelled by an escalating war in West Asia now continuing for over 10 weeks, has severely disrupted global oil supply and energy flows, reviving comparisons with the energy shocks of the 1970s.

With crude breaching the $100-per-barrel mark and key supply routes under strain, governments across the world are once again turning to a familiar set of crisis-response tools first seen during the 1973 oil embargo. Brent crude has surged past $100 a barrel, while refined products such as diesel and jet fuel have seen even sharper increases.

The International Energy Agency (IEA) last month warned that this is among the most severe disruptions in modern energy markets. “The war in the Middle East is creating a major energy crisis, including the largest supply disruption in the history of the global oil market," said IEA Executive Director Fatih Birol, adding that prolonged instability could deepen economic stress worldwide.

1973 playbook: How world responded then?

The last time the global economy faced such a shock was in 1973, when an oil embargo by Arab producers triggered a fourfold spike in prices. Crude jumped from around $3 to nearly $12 per barrel, sparking fuel shortages, long queues at petrol stations, and a period of stagflation across major economies.

Governments responded with aggressive demand-control measures that became the blueprint for future crises. These included fuel rationing, speed limits, Sunday driving bans, and restrictions on private vehicle use. Public transport systems were expanded, while citizens were encouraged to reduce consumption.

At the same time, countries began building strategic petroleum reserves, diversifying energy imports away from the Middle East, and accelerating investments in nuclear and renewable energy. The crisis marked a turning point in global energy geopolitics, ending the era of cheap oil and reshaping industrial policy for decades.

India’s current response

India, one of the world’s largest oil importers, is now drawing on similar strategies to manage the current shock — though without direct rationing. Prime Minister Narendra Modi on Sunday urged citizens to reduce petrol and diesel consumption, emphasising that saving energy is essential in the face of global price pressures.

“We have to reduce our use of petrol and diesel. In cities with metro lines, we should try to travel by metro…If we must use a car, then we should try to car pool," the Prime Minister said, urging a shift back to work-from-home and online meetings to cut fuel use.

He also called for reduced gold purchases, lower foreign travel, and greater attention to conserving foreign exchange.

India has so far avoided retail fuel price hikes or formal rationing, even as global prices remain elevated. However, the government has increased LPG prices following supply disruptions linked to the Strait of Hormuz crisis.

Oil marketing companies are also absorbing significant losses to prevent sharp retail increases, with daily under-recoveries estimated at over Rs 1,000 crore.

Union Petroleum Minister Hardeep Singh Puri noted that while companies are bearing higher import costs, consumer prices are being stabilised to avoid economic shock, resulting in large fiscal pressures. He also urged citizens to turn Modi’s “empathetic appeal" into a mass movement “to save and conserve energy."

(With inputs from agencies)

News world The 1973 Playbook: What Governments Do During Oil Shocks — And What India Is Already Doing

Read More