When Arab oil ministers gathered in October 1973 and announced an embargo against nations supporting Israel, they unleashed a shock wave that reshaped the global order. Oil prices quadrupled. Western economies teetered on the brink of collapse. Within months, the U.S. found itself negotiating from a position of weakness it had never before experienced.
Fifty-three years later, the oil weapon has returned, not wielded by a coalition of Arab states, but by a single country under relentless American-Israeli bombardment. Iran, which is under daily attacks, has deployed its own version of the embargo. And remarkably, it looks like it's working.
The proof is staggering: On March 20, 2026, the Trump administration, which launched the war against Iran on Feb. 28, issued a 30-day sanctions waiver allowing the purchase and sale of Iranian oil already at sea. The U.S., the nation actively bombing Iran, approved buying oil from the very country it is fighting. Treasury Secretary Scott Bessent admitted this would send “140 million barrels of oil to global markets” to ease prices.
As one energy analyst put it: “If we've reached the point of loosening sanctions on the country we are at war with, we’re really running out of options.”
The Arab Oil Embargo, which lasted from October 1973 to March 1974, marked a turning point in modern history. In response to the U.S. decision to resupply the Israeli military during the October 1973 War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) announced an embargo against the U.S. and other nations supporting Israel. They banned petroleum exports to targeted nations and introduced production cuts.
The effect was immediate and catastrophic. Oil prices doubled, then quadrupled. A global recession loomed. The U.S., facing growing consumption and dwindling domestic reserves, found itself more reliant on imported oil than ever before and was forced to negotiate from a weaker international position. European allies and Japan, desperate to secure energy supplies, sought to distance themselves from U.S. Middle East policy.
Most importantly, the embargo achieved its political goal. By January 1974, Secretary of State Henry Kissinger had negotiated an Israeli troop withdrawal from parts of the Sinai. The promise of a negotiated settlement between Israel and Syria was sufficient to convince Arab oil producers to lift the embargo in March 1974. Oil, weaponized, had forced the world’s superpowers to change their policy.
Today, Iran has deployed its own version of the oil weapon, and it may be even more effective than the 1973 embargo. Iran has effectively disrupted traffic through the Strait of Hormuz, through which approximately 20% of the world's crude oil and liquefied natural gas passes during peacetime. Unlike in 1973, the resource is not being refused by producers; it is physically blocked. Gulf producers, dependent on the same choke point, have already begun reducing output due to limited storage capacity.
The impact on global markets has been dramatic. Oil prices have surged by about 50% since the war began, with Brent crude consistently trading above $100 per barrel. By late March, prices had surpassed $105. Energy analysts warn that if the conflict drags on, prices could easily climb to $140, weakening the global economy.
For the U.S., this pressure comes at a politically sensitive moment. The Trump administration faces a dilemma: soaring energy prices could have political repercussions. The administration’s frantic efforts to tame prices, including waiving sanctions on Russian oil and now permitting Iranian oil sales, reveal the depth of Washington's crisis.
The most stunning concession came on March 20, when the Treasury Department issued a 30-day waiver allowing the sale of Iranian oil already at sea. As Bessent explained, “In essence, we will be using the Iranian barrels against Tehran to keep the price down.” This is the third such sanctions waiver in just over two weeks.
The irony could not be more stark. The U.S., while bombing Iranian targets, is simultaneously facilitating the sale of Iranian oil to cool global markets. The very funds generated by these sales flow to a country Washington is actively fighting.
The effectiveness of Iran's strategy offers a powerful rebuttal to those who argue that oil can no longer serve as a weapon of war. In recent years, some Arab officials have suggested that energy embargoes are relics of the past when asked to be used to confront Israeli expansionist plans against Palestinian land. The events of March 2026 prove otherwise.
Iran has demonstrated that control over a strategic chokepoint, even without the collective weight of OPEC, can extract extraordinary concessions from the world’s sole superpower. The U.S., despite its military superiority, has found itself forced to choose between its war aims and its economic stability.
Even if the world is better prepared than in 1973, as Organisation for Economic Co-operation and Development (OECD) members now maintain strategic petroleum reserves equivalent to three months of imports. Yet these buffers have not eliminated vulnerability. The oil reserves are “effective only if the conflict doesn’t last too long,” according to an energy expert.
Iran’s strategy also reveals the limits of American military might. Despite unleashing what it calls “Operation Epic Fury,” a campaign aimed at destroying Iran's missile capabilities and nuclear infrastructure, the U.S. has been unable to break Tehran’s resolve. Iran’s leadership continues to threaten "complete closure" of the strait if its power plants are targeted.
The parallel between 1973 and 2026 is unmistakable. In both cases, a Western-backed Israeli military campaign provoked a Middle Eastern power to deploy oil as a weapon. In both cases, the result was a global energy crisis that forced the U.S. to reconsider its policies. And in both cases, the oil weapon proved effective.
For Iran, the calculus is clear: if it can make the cost of war unbearable for American consumers, it may force Washington to reconsider its support for Israel's expansionist agenda. The fact that the Trump administration has already begun granting sanctions waivers suggests this pressure is working.
Iran’s relative success also offers a reminder that energy leverage, far from being obsolete, remains one of the most powerful tools available to nations confronting military aggression. The oil weapon is not dead – it still works – and could be wielded to advance a just settlement for the Palestinian cause and to put an end to Israel’s expansionist agenda across the region.
