"Once oil is in a tanker or refinery, there is no controlling its destination. During the 1973 embargo, for instance, OPEC oil that was exported to Europe was simply resold to the U.S. or ended up displacing non-OPEC oil that was diverted to the U.S. market. U.S. oil imports were no more disturbed at the end of the day than Soviet grain imports were disturbed by the short-lived and ineffectual 1980 grain embargo. Saudi oil minister Sheik Yamani conceded afterwards that the 1973 embargo 'did not imply that we could reduce imports to the United States . . . The world is really just one market. So the embargo was more symbolic than anything else.'
"But how does that square with the popular belief that the October 1973 embargo quadrupled world oil prices, spawned shortages, and sent the U.S. into an economic tailspin? Well, world oil prices did skyrocket. But it had less to do with the embargo than with the panic stockpiling triggered by tensions in the Middle East, tensions that broke into open war by October. While Arab oil production was cut by 340 million barrels between October and December, that cutback was less than the inventory buildup that occurred earlier in the year. There was still plenty of oil to go around. But few were willing to sell it given the fear of a future dearth."
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