A Tale of Two Oil Shocks: Ukraine and Yom Kippur
Comparison to the 1973 Mideast war shows some striking similarities. Central banks need to get their inflation response right in the wake of Russia’s invasion.
October 1973: An Israeli Centurion tank in the Sinai desert during the Yom Kippur War.
Photographer: Harry Dempster/Hulton Archive/Getty
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For market-followers, it has long appeared that the closest historical analogy for the shock delivered by Russia’s invasion of Ukraine was the crisis that followed the 1973 Yom Kippur War — the surprise attack on Israel by a group of Arab countries that started on the Day of Atonement, the most sombre day in the Jewish religious calendar. Israel eventually repulsed the attack, and an oil embargo followed on those countries that had taken the Israeli side. The economic history of the 1970s is well-known, as is the fact that the issue of Israel’s relationship with the Palestinians, and its Arab neighbors, remains fraught.