A situation in which there is a sudden fall in the availability and/or a large increase in the price of oil. For the many economies which rely mainly on oil for their energy requirements, a fall in the quantity available would produce a major slump in real output. For countries importing their oil a large price rise produces an immediate and severe balance-of-payments problem. The term usually refers to the oil crisis of 1973-4 when the members of the Organization of Petroleum Exporting Countries raised the price of oil by a factor of fom and some Middle Eastern oil producers threatened a boycott of supplies to countries regarded as sympathetic to Israel in the 1973 Arab-Israeli war.
|Reference: Oxford Press Dictonary of Economics, 5th edt.|