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World heading to Yom Kippur War-level oil shock, French minister says

Bruno Le Maire warns Russia’s invasion of Ukraine and subsequent sanctions on crude will send prices to record highs not seen since OPEC embargo following the 1973 conflict

A worker pumps gas at a Lukoil station in Newark, New Jersey, on March 2, 2022.  (AP/Ted Shaffrey)
A worker pumps gas at a Lukoil station in Newark, New Jersey, on March 2, 2022. (AP/Ted Shaffrey)

PARIS, France — The spike in energy prices caused by Russia’s war in Ukraine will produce effects comparable to the 1973 oil shock, French Economy Minister Bruno Le Maire warned on Wednesday.

The current energy crisis was “comparable in intensity, in brutality, to the oil shock of 1973,” Le Maire told a conference in Paris.

“In 1973, as you know, the response caused an inflationary shock, leading central banks to massively increase their rates, which killed off growth,” Le Maire added.

“This has a name: stagflation, and it’s precisely what we want to avoid in 2022.”

The first oil shock in the early 1970s was caused by the Yom Kippur War when Egyptian and Syrian forces launched an offensive against Israel.

Six Arab members of the OPEC oil cartel declared an embargo on exports to countries supporting Israel, notably the United States.

French Economy and Finance Minister Bruno Le Maire talks during a press conference at the Economy Ministry after an exceptional Ecofin Visio meeting about the Ukraine crisis, in Paris on March 2, 2022. (Eric PIERMONT / AFP)

They quadrupled the oil price to $11.65 a barrel, provoking recessions in Western countries and steep inflation.

European wholesale gas and crude oil have rocketed to record, or near-record, prices this week due to supply fears linked to Russia’s February 24 invasion of Ukraine.

The United States and Britain announced Tuesday they were cutting off Russian energy imports in response to the war, triggering another surge in prices.

The price of Brent crude, the international benchmark, was up at almost $130 per barrel on Wednesday.

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