The 1979–80 Oil Crisis: U.S. Crude Oil Prices, 1975–1986

Context

Iran's revolution cut its oil output by 4.8 million barrels per day, about 7 percent of world production, by January 1979.^[1] EIA notes that much of the lost Iranian production was offset by higher output from other OPEC members.^[2] In 1980 the Iran–Iraq War began and many Persian Gulf producers reduced output as well; by 1981 OPEC production was about a quarter lower than in 1978.^[3]

The supply loss may not have been the main driver. The Federal Reserve's history points to fear of further disruptions, speculative hoarding, and strong demand from a booming world economy, and cites an estimate that surging demand was responsible for much of the price increase.^[1] Accommodative U.S. monetary policy likely allowed the higher energy prices to pass into general inflation.^[1]

Slowing economic activity, new energy production and conservation eventually saturated the market; real oil prices began to subside in mid-1980.^[1] In the United States, phased decontrol of crude oil prices began on June 1, 1979, and remaining controls ended on January 28, 1981.^[5][6]

About this series

EIA's daily WTI and Brent spot prices begin in 1986 and 1987, so this page uses the U.S. crude oil first purchase price (EIA series F000000__3): the average price paid for domestic crude oil when it first changed hands after production, in dollars per barrel. It is not a spot benchmark and it is not directly comparable with the WTI and Brent prices elsewhere on this site. In these years U.S. crude oil prices were under federal price controls, including those of the Emergency Petroleum Allocation Act of 1973.^[3] Phased decontrol began on June 1, 1979,^[5] and Executive Order 12287 of January 28, 1981 exempted crude oil and refined products from the remaining controls.^[6] Because of those controls, the U.S. first purchase price is not a measure of world oil prices in these years.