The first of these areas has the world’s largest known oil pools. It is the Middle East and North Africa, lands controlled by Arab and Moslem nations. Major producers there are Algeria, Abu Dhabi, Iran, Iraq, Kuwait, Libya, Qatar and Saudi Arabia. In 1973 a compilation of oil reserves shows that nearly two thirds of the world supply is located in those lands.

Where is the second-largest proved reserve of oil? In the Soviet Union. She has about 15 percent of the world total.

Thus, about 75 to 80 percent of all the oil reserves on earth are controlled by these nations. And they have political and religious beliefs that are at odds with the nations that need the oil but do not have it​—western Europe, North America and Japan.

Largest Reserve

Of all the nations producing oil, the largest known reserve is held by Saudi Arabia. She has an estimated one hundred and fifty billion barrels, much larger than any other known. Some experts say it may actually be much larger than that. So it is to Saudi Arabia that many needy nations look as a main source of present and future oil supplies.

During most of 1973 Saudi Arabian oil production was over 8,000,000 barrels a day. By 1980, users hoped, her production would rise to about 20,000,000 barrels a day. Indeed, they feel it must rise that sharply if the oil requirements of the needy industrial nations are to be met.

At present, no other country appears able to increase oil production at such a rapid rate. Because of her huge reserves, the easy accessibility of the oil, and the fact that production could be greatly increased in a short time, Saudi Arabia is looked to as the one country that must “come through” in the next few years. No alternative source of such huge and available reserves is known at this time. As U.S. News & World Report states:

“Experts going down the list of alternatives to Saudi oil are gloomy. Canada, now America’s top supplier of crude oil, has reversed its long-standing export policy and has adopted a ‘home front first’ approach. Nigeria, another major supplier, is said to be peaking out, at least temporarily. So is Indonesia. Venezuela is finding new reserves expensive to develop.

“As for non-Arab [but Moslem] Iran, . . . authorities insist there is ‘not a chance’ that it can meet U.S. needs.”

So western Europe, Japan and North America find they must increasingly look to the oil of the Arab-Moslem world of the Middle East and North Africa, especially Saudi Arabia. That is the only area known that could supply the enormous quantities of oil that will be needed by all these nations in the years just ahead.

But the question is: Will those nations having the oil reserves supply enough of it? And at what cost?

The Changing Mood of Oil Producers

AT ONE time the industrial nations had few worries about oil. After World War II, the United States produced more than she needed. Oil supplies in the rest of the world were more than enough for western Europe and Japan.

Because of this the industrial nations did not have to worry about the mood of Arab oil producers. If the Arabs did not want to sell their oil for any reason, it could be obtained elsewhere.

However, as the years went by, oil demand increased swiftly. With populations “exploding,” and the larger nations becoming more industrialized, oil needs “exploded” too. In time, the surpluses disappeared. Western Europe and Japan became more and more dependent on oil from the Middle East and North Africa, obtaining most of their supplies from those sources.

It then became apparent that because of the dependence on oil imports from the Arab world, western Europe and Japan could face serious problems if they alienated those countries. Whereas at one time western Europe had largely sided with Israel in its conflicts with the Arabs, by the time of the October 1973 war between the Arabs and Israel, nearly all those nations decided to declare their “neutrality” in the conflict. Thus, Arab oil changed the foreign policy of those oil-needy nations.

Changing Arab Mood

In past years, the Arab nations had been largely pro-Western, pro-American and anti-Communist. Particularly was this true of the governments of Kuwait and Saudi Arabia.

However, four wars have been fought in the Middle East since the formation of the State of Israel. In all that time, the United States has supported Israel. But that support has had its effect on the Arab world. In this regard, U.S. News & World Report noted:

“Arabs everywhere are puzzled and dismayed by the U.S. approach to Middle Eastern problems. Why, they ask, does the United States continue to antagonize a people who outnumber the Israelis by 40 to 1​—and who control the oil resources which the U.S. will need over the next decade?”

As a result, Arab regimes in recent years tended to lean more and more away from the United States. Even such formerly staunch pro-American Arab lands as Kuwait and Saudi Arabia experienced a gradual change in attitudes.

In recent years, warnings by Arab nations began to accumulate. They said that if Arab lands held by Israel were not returned there could be repercussions where it would hurt the most​—in the oil supply.

Particularly ominous were the warnings issued by Saudi Arabia’s King Faisal, long a friend of the United States. In 1973, over national television in the United States, he warned that before long he might be forced to change his policy of selling all the oil that the United States, western Europe and Japan needed. It might be used as a political weapon to pressure other nations. And of all Arab nations, the use of oil by Saudi Arabia in this way would hurt the most.

England’s Guardian said on September 15, just before the outbreak of war in the Middle East:

“It requires only one Arab regime, King Faisal’s, to make the oil weapon work. He, on his own, commands the economic means. But until recently, as America’s best friend in the Arab world, he lacked the political will. . . .

“Changing Faisal’s mind has been one of [Egyptian] President Sadat’s few indisputable achievements. . . .

“In April this year, the Saudi oil minister told the Americans that unless they changed their pro-Israel posture in the Middle East Saudi Arabia would not ‘significantly’ raise its output.

“Since then Faisal, not a man given to public criticism of his friends, has delivered more warnings.”

What was significant was that the Arab nations, and Saudi Arabia especially, did not have to cut all oil production to make their oil weapon work. Why? Because the oil needs of the oil-short nations keep growing rapidly. So merely keeping Arab oil production at the same level would soon result in hard times for the needy nations.

The Oil Squeeze

The situation that oil users found themselves in after war broke out in late 1973 was very different from that in 1967. In the 1967 Arab-Israeli war several Arab countries suspended oil shipments to the United States and Britain for their backing of Israel. But the embargo did not last long because of the then oil surplus in world supplies.

By 1973 things had changed drastically. The oil surplus in industrial nations had disappeared due to increasingly heavy usage and limited local supplies. Hence, in 1973 the Arabs found themselves in the “driver’s seat” where oil was concerned.

When the latest war came, there was little doubt that some form of Arab retaliation with oil was in the offing. Kuwait’s ambassador to the United States stated: “We will use oil as a means of putting pressure on countries that take a side with Israel. If we have any evidence of any country taking a side there will be an embargo. We’d make sure our oil didn’t get to that country, either as a refined product or crude.”

The blow fell with surprising swiftness. The Arab oil-producing nations agreed to cut production by a minimum of 5 percent immediately, in October. They also agreed to continue cutting production by 5 percent each month afterward. Until when? The Wall Street Journal said: “The Arab oil ministers said production cuts would be made and continued until pre-1967 Arab-Israeli boundaries were reestablished and the rights of Palestinians were assured.”

Even more of a shock to Western nations, and Japan, was the step taken by previously pro-Western Saudi Arabia, the largest of all Arab oil producers. She announced that her cut in production would be, not just 5 percent, but 10 percent! Several other producers did the same.

If the gradual cuts month by month continued, these could, of course, cause severe economic problems for western Europe and Japan in a few months. The vast majority of their oil supplies came from the Middle East and North Africa.

More shocks came in quick succession. The next move was that the Arab oil-producing countries announced a total cutting off, an embargo, of oil supplies to the United States. One third of the oil imports of the United States during 1973 came from the Middle East, with the needs mounting each year.

The total cutoff of oil to the United States was in addition to the 5-percent and 10-percent decreases in overall production. Thus there was originally scheduled a significant drop in oil supplies from the Arab world in October. And at the end of that month the embargo was extended to the Netherlands. The Arab nations claimed that the Dutch had supported Israel and would get no more oil. This further reduced supplies available to the West, and to Japan, as the Netherlands had been a transshipment point for oil.

However, in early November, the Arab lands decided that their oil cuts would be set at an immediate 25 percent, with further 5-percent cuts monthly! And added to the embargo list were Portugal, Rhodesia and South Africa. In the months after this, the oil flow was changed to meet changing circumstances.

In addition to those severe blows, there was another still to come. Whatever oil was sold would be much higher in price.

What the Higher Cost of Oil Means

While oil had been relatively cheap in past years, in October of 1973 Arab oil-producing countries raised their prices again. Time magazine reported that it was by “a stunning 70%.” In later months, other huge increases came. The cost to the using nations became staggering, affecting their balance of payments badly.

That meant several things. For one thing it would keep Arab oil revenues high on whatever oil they did produce and sell. It would also force anyone who uses oil to charge higher prices for their products. Americans, Europeans and Japanese citizens would have to pay more for their gasoline, heating oil and other petroleum products.

Thus, with the huge rise in the price of oil, Arab lands would experience no loss of income even with reduced production. So there was no pressing need for them to worry. The New York Times described the matter as follows:

“Some of the big producing states, notably those with sparsely populated desert territories like Saudi Arabia, Kuwait and Libya, have become more conservation-minded.

“These countries are already earning as much as they can reasonably spend from their current levels of oil production. Accordingly, they prefer to keep any additional oil in the ground where it would surely appreciate in value rather than pile up huge surpluses of unspent dollars subject to the ravages of devaluation and inflation.

“It is here, in the reluctance of the producers to produce as much as the markets want, except at a high political and economic price, that the crunch lies in the prospective world energy crisis.”

Because of the importance of oil to industrial nations, the oil-dependent countries feel that the situation in the Middle East leaves their jugular vein, as it were, exposed, and continuation of life as they now know it endangered by others.

ONE of the solutions proposed to protect oil supplies caused heated comments. United States Senator J. W. Fulbright was among those who warned that, because of the oil crisis, “our present policy-makers and policy-influencers may come to the conclusion that military action is required to secure the oil resources of the Middle East, to secure our exposed jugular.”

Most authorities, however, quickly disassociated themselves from such views.

At one time such a “takeover” of oil lands may have seemed, or even have actually been, relatively simple. Few small countries in the past had the resources or friends to stave off such takeovers. That is why in past centuries the European nations were able to carve up most of Africa, Asia and South America.

But things have changed. It is no longer a matter of any nation being free to take over whatever country it wants. For example, the oil-producing nations are located in a very large area of North Africa and the Middle East. It would require enormous armed forces and resources to conquer and occupy all those lands. Regarding this prospect, The Guardian comments:

“Occupying Kuwait [or any other oil-producing country] would generate such outrage that it would ultimately mean occupying every oil field in the Arab world, protecting every pipeline, storage tank, and tanker terminal from the Persian Gulf to Algiers.

“It would, as Elmer F. Bennett, assistant director of the U.S. Office of Emergency Preparedness, has said, ‘make Vietnam look like a picnic.’”

Another factor, an important one, is the giant that sits to the immediate north​—the Soviet Union. Of her, The Wall Street Journal stated: “Since Russia has so much to gain in this situation where stakes are so immense, it has strong reason for supporting its Arab allies. This may be the key to control of the Mideast’s oil, oil which the United States may desperately need in the years ahead.”

Would the Soviet Union sit idly by if the oil fields near her were invaded? Many authorities feel that the Soviet Union would consider her vital interests at stake, and her massive armies are only a few hours away from the area. So for the first time, the relatively weak Arab countries have a country backing them that can challenge the strongest of nations.

Because of Soviet backing for the Arabs, her influence and prestige have grown in the area, while the influence and prestige of the United States have declined. This is quite significant. It means that control of the critical oil resources of the Middle East and North Africa are in the hands of those who have looked with growing disfavor on the policies of the United States and Israel.

Hence, in the time of crisis during the recent Middle East conflict, the Soviet Union and the Arabs acted in cooperation. The Soviets backed their allies with weapons and diplomacy, even with an implied threat to send troops. With that backing, the Arab states felt they could begin using their main weapon, oil. Says U.S. News & World Report concerning these developments:

“Europe already asked a question vital to that continent: Was this Mideast conflict really Russia’s oil war, the one so long feared in Western Europe?

“Those likely to suffer most, if Arabs encouraged by Russia kept reducing the flow of their oil abroad, were the U.S., Japan, Western Europe​—all non-Communist. . . .

“The Arab grip on readily available oil reserves and the Soviet grip on Arabs dependent on Russia for arms were recognized by most Europeans as facts of life not likely to be altered without applying superior force.”

But, as noted above, the application of such outside “superior force” has become highly risky. Few nations would want to take on the combination of the growing military might of the Soviet Union and the growing economic might of Arab oil.