World heading for 1973-type energy shock — French minister

PARIS — The spike in energy prices caused by Russia's war in Ukraine will produce effects comparable to the 1973 oil shock, French Economy Minister Bruno Le Maire warned on Wednesday.

The current energy crisis was "comparable in intensity, in brutality, to the oil shock of 1973," Le Maire told a conference in Paris.

"In 1973, as you know, the response caused an inflationary shock, leading central banks to massively increase their rates, which killed off growth," Le Maire added.

"This has a name: stagflation, and it's precisely what we want to avoid in 2022." 

The first oil shock in the early 1970s was caused by the Yom Kippur war when Egyptian and Syrian forces launched an offensive against Israel.

Six Arab members of the oil cartel of the Organisation of the Petroleum exporting Countries (OPEC) declared an embargo on exports to countries supporting Israel, notably the United States.

They quadrupled the oil price to $11.65 a barrel, provoking recessions in Western countries and steep inflation.

European wholesale gas and crude oil have rocketed to record, or near-record prices this week due to supply fears linked to Russia's February 24 invasion of Ukraine.

The United States and Britain announced on Tuesday they were cutting off Russian energy imports in response to the war, triggering another surge in prices.

The price of Brent crude, the international benchmark, was up at almost $130 per barrel on Wednesday.