The year is 1967, and a clash between the infant state of Israel and its enemy Arab neighbors sets the tone for future tensions in the Middle East. This may all sound familiar, as the mere existence of Israel has caused both sensational debate and controversial actions on the part of other governments. From the late 40s to the 70s, Israel would have to battle it out for its own survival, a sheep among wolves. The 1967 Arab-Israeli War marked a shift in battle tactics and geographic boundaries. Besides the clash of armies and Western nations’ attempts to intervene and mitigate the situation, oil companies would soon be in the spotlight of this macabre scene. The 1967 oil embargo was unprecedented as oil had never before been used as a weapon against a region, let alone a nation, while the ascent of natural resources’ importance to geopolitics would mean decades-long intimidation, economic catastrophe, and divisive intranational policies.
The story begins with the controversial founding of the Israeli state in 1948 in the formerly British-controlled territory of Palestine. The League of Nations had imposed a mandate over Palestine in 1922, which had transferred from Ottoman rule to British rule following the Ottoman Empire’s defeat by English forces. The Palestine Mandate would set the foundations for a Jewish national home, but this plan would not be officially realized until May 14, 1948, when the mandate ended at midnight precisely. The Palestinians had the creation of Israel coming for a long time, unable to voice their opinions or influence even one part of the proceedings. No wonder then that they utilized force over words, deprived of any acceptable channel of communication. It is also telling that the Europeans did not foresee how destructive this amount of ignorance could be, a cautionary tale against barring all relevant parties from participating in the discussion. Now, the transition from mandate to state was a
foreshadowing of things to come: the Arab inhabitants regularly defended their homeland against Israeli settlers through violent attacks, while the British tried to facilitate as much Jewish immigration as possible. Now, it is extremely clear that the next few decades would be the most trying in all of Israel’s young history. Fast forward to 1967: the Arab states of Jordan, Syria, and Egypt are bristling from previous conflicts with their new neighbor and are sabotaging their progress as a fledgling economy. Without going into too much detail, the four nations end up battling it out head-on, thanks to Israel carrying out an air strike, destroying around 90% of Egypt’s air force. The war would not just be a confrontation of clashing interests; it would be a violent competition of different leadership styles, and inefficiency versus efficiency. It is safe to say that the Arab states were far more inferior to Israel in terms of strategy and accomplishment, despite the Arab forces far surpassing the Israelis in number.
The sound defeat of the Arabs, combined with the near destruction of their military apparatuses, bruised their pride more than they could bear.
With traditional weapons and aircraft proven to be useless, the Arabs needed something that would be a natural advantage while wreak as much damage as they could. To regain their honor, Arab states officially placed blame upon the United States for assisting Israel’s victory, the perfect excuse to impose an oil embargo on the North American superpower. President Lyndon B. Johnson then decides to shift America’s oil dependency onto the countries of Saudi Arabia, Kuwait, and Iran, which was still under the rule of the Western-friendly Shah at the time. The main roadblock, however, were the citizens, furious that their rulers would dare betray their Arab brothers and sisters. Oil companies had no choice but to increase domestic production and expand operations in other nations like Venezuela. Shell, BP, SoCal, Texaco, Esso, and Mobil opted to band together and redirect all their operational routes outside of the embargo-participating countries, as if they were the American version of the Organization of the Petroleum Exporting Countries (OPEC). These oil firms had to also ignore antitrust laws in order to survive the 1967 embargo, a risk that was birthed by the mega-trend of
globalization. Competitors were now collaborating, underscoring how destructive the embargo could be. The situation also delineates the impossibility of any one company solving the issue on its own, testifying to the grand scale of the effects of war. The American government facilitated much of the process, using diplomatic, legal, economic, and military strength to bend the tide to their side.
One may be wondering why the embargo of 1967, which was a long time ago, is still worth mentioning today. America never really got over the effects of the embargo, not being able to match domestic oil production with pre-1967 levels. The environmental movement of the early 70s gave America a short respite from oil consumption, but the transition to coal proved unsustainable and oil became a thorn in the nation’s side once more. President Nixon even drew up an unrealistic plan to make America totally oil-independent by 1980, but vulnerabilities exist to the present day. In 1973, the year of yet another Arab-Israeli war, OPEC decided to impose yet another embargo, making oil prices shoot through the roof and cause an energy crisis. It is clear that oil companies would never be able to produce the success they had before 1967. These same firms were also responsible for supplying the U.S. military with oil, entangling them in a web of geopolitical, national, environmental, and legal risks. Arab states also wanted to nationalize oil wells, wrangling with American companies over ownership rights and percentages. Exxon is said to have once revealed classified American security information with Arab states in order to secure favorable business deals.
Saudi Arabia’s willingness to listen to the West during and after 1967 set the foundation for warm relations with the United States that have lasted up until today. Iran is obviously an enemy now, what with Ayatollah Khomeini’s revolution, while Kuwait still enjoys cooperating with Western countries. Johnson’s actions in 1967 prioritized loyalty to Israel over oil consumption, explaining the challenge oil companies have been facing in meeting demand while not straying away from America’s foreign policy interests. The risk posed by the 1967 and subsequent oil embargoes have been hard to
understand and hard to update. Understanding when a war will break out in the Middle East is complicated, considering the monarchical systems, political revolutions, modern terroristic threats, economic instability, and other factors that contribute to the flow of oil supply from the region. Updates are also difficult to obtain accurately, precisely because an event like the Arab Spring resulted from one isolated incident, in which Tunisian citizen Mohamed Bouazizi set himself on fire. No one could have predicted this self immolation taking place, and, although corrupt governments are to blame, attempting to control the damage they inflict on their own societies is outside the ability of any oil company. These are the reasons the natural resource industry is risky to start with, and the situation only gets trickier with new environmental movements and activists both on the individual and organizational level challenging these firms’ primary money-making activities.
The weaponization of oil is a sure sign of the Middle East’s formidability. The myth that the West is the one world region with the strongest and richest countries with a unique capacity to rule over weaker areas. The hubris of Western nations is threatened by Arab control of the majority of the global oil supply, and their success in controlling foreign interests within their home region cements their desire to continue utilizing oil for what they see as the greater good. And, although the United States enjoys the cooperative efforts of some oil-producing countries, any sudden push to grant Israel greater concessions or expansion will throw these weak ties into disarray. Thus, foreign oil companies really must depend on the West treading lightly and carefully, keeping in mind how sensitive the Arab states are when reminding themselves of the historical events of the past century. It is also unreasonable to suggest that decades of fighting and backstabbing can be forgotten in the name of profit-generation, just as the Arab Spring and other revolutions have shown. Citizens are more concerned with preserving their way of life in the territory the generations before them owned, quite stubborn to give a pass to companies in a business that does not make enough effort to pass the wealth on down through each socioeconomic class.
Sources: ADL, The Fuse, Encylopedia Britannica, Brookings Institute, UCLA International Institute, Israel Ministry of Foreign Affairs, Resilience, Yale Law School, United States Department of State, University of Texas Libraries, University of Akron, PBS Thirteen