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The months preceding the 1973 embargo witnessed a marathon of negotiations over prices, taxes, and shares between governments of the oil-producing countries and the international oil companies (IOCs), which held long-term concessions.The pressure on oil prices started building up a few days before the embargo, when negotiations between the host countries and IOCs broke off.The Persian Gulf states, including Iran, reacted by unilaterally increasing the posted price by 70% on Oct. 16, 1973.The following day, members of the Organization of Arab oil Exporting Countries (OAPEC), less Iraq, decided to use oil as a political weapon by cutting production without imposing any embargo. Some countries, such as Kuwait and the UAE, announced embargoes on oil exports to the US on Oct. 18. Saudi Arabia rejected calls to impose an embargo at first, but it imposed one on Oct. 19 after the Nixon administration of president Richard M. Nixon ignored warnings not to be biased toward Israel.
After the start of the October war, Kuwait called on OAPEC to meet in Kuwait City on Oct. 16 to discuss the use of oil to support the war efforts of Egypt and Syria. All countries except Iraq agreed to cut production by 5% from September levels. They would cut an additional 5% from the previous month's production every month until Arab demands were met or until the economy of the individual country did not permit further cuts.They rejected calls for a complete halt in production and the imposition of embargoes on countries that supported Israel.
Iraq withdrew from the meeting.The Iraqi withdrawal created a problem for OAPEC. Consensus was required for an OAPEC resolution on production. The withdrawal of the Iraqis prevented OAPEC from issuing the resolution under the...