The first occasion for a showdown between producer countries on the one hand and consumer countries and their oil companies on the other came with the Kippur war between Israel and the Arab countries from October 6 to 16, 1973. During this war and in the following months, the oil producing Arab countries successfully wielded the weapon represented by their oil resources. They notably placed an embargo, for several months, on exports to countries which were branded "enemies of the Arab cause" - including practically all the countries of Western Europe - while reducing their overall oil output level. They decided to overturn the principle of price setting for crude oil through agreements with the oil companies and hiked up prices on a unilateral basis. Finally, they stepped up their claims to holdings in the companies producing crude oil. Under the combined impact of these measures, oil prices quadrupled in just a few months and uncertainty clouded the quantity and price situation which the world's biggest importer, the European Community, would have to face. A common trade policy for oil could have considerably boosted the negotiating leverage of the EEC Member States, if only it had existed; but even after the bitter lesson of their weakness in the face of a united front of producing countries, the European States were not ready to shed a bit of their sovereignty in the oil sector in order to collectively negotiate the terms of their supply.
In the Member States, the first effect of the crisis was a shortage of oil, which led to a number of measures to restrict consumption (no use of cars on Sundays, speed limits, heating restrictions and so on). As shortage fears diminished, prices and their financial consequences became the uppermost concern. Although supply difficulties tailed off after December 1973, the prices for crude oil kept growing to reach twelve times their pre-crisis level (36 dollars the barrel compared to 3) after the second oil-shock provoked by the Iran-Iraq war of 1980. This abrupt increase in crude oil prices in the space of six years dealt a devastating blow to the economies in several regions of the world, including Europe. The Community Member States, accustomed to trade surpluses, saw these frittered away into a deficit situation. Recession began to bite in nearly all the European countries and gave rise to what was termed "Euro-stagnation" or "Euro- slump" [see section 6.1].
Aside from these economic consequences, the 1973 crisis created a sense of insecurity among the European countries, and rightly so, for it revealed the vulnerability of their economies due to their dependence on available quantities and price levels of the vital fuel, oil. The cartel of producer countries inspired much less confidence than its predecessor, the cartel of the "seven sisters" (Exxon, Shell, B.P., Mobil, Texaco, Chevron and Gulf). The concept of everyone settling their own affairs and entrusting multinational oil companies with the common good took a serious blow when the seven sisters and their poorer relations such as Total, Elf and Agip lost ownership of their crude oil resources and were therefore unable to continue guaranteeing the supply security of Europe. This awareness of the Community's energy vulnerability led to the need for a coherent system of external relations to guarantee supply security.