History of Oil Wars: From 1973 to 2026 — Lessons We Never Learn

History of Oil Wars: From 1973 to 2026 — Lessons We Never Learn

On February 28, 2026, when Operation Epic Fury turned the skies over Tehran orange, India's oil import bill began its now-familiar crisis trajectory. Brent crude surged from $67 to $120 per barrel. LPG hit Rs 913 per cylinder. The Strait of Hormuz — through which a significant portion of India's crude arrives — slammed shut.

Indians reacted with shock. But they shouldn't have. This has happened before. Not once. Not twice. At least four times in the past fifty years, oil has been weaponized, supply has been disrupted, and import-dependent nations have paid the price.

Each time, the lesson was clear: reduce dependence on imported fossil fuels. Each time, once prices normalized, the lesson was forgotten. India's crude import dependence today — approximately 90% — is higher than it was during any previous crisis.

Here is the history we keep refusing to learn from.

1973: The OPEC Embargo — When Oil Became a Weapon

In October 1973, Egypt and Syria launched a surprise attack on Israel during the Jewish holiday of Yom Kippur. The United States airlifted weapons to Israel, tipping the military balance. In retaliation, the Organization of Arab Petroleum Exporting Countries (OAPEC) declared an oil embargo against the US, the Netherlands, and other nations that supported Israel.

The price of oil quadrupled in months — from roughly $3 per barrel to $12. Gas stations across America ran dry. Rationing was implemented in multiple Western nations. The global economy plunged into recession.

For India, the 1973 crisis was a warning shot. India was far less oil-dependent then — the economy was largely agrarian, car ownership was minimal, and domestic oil production covered a larger share of needs. But the crisis still caused balance of payments pressure and contributed to the economic difficulties that, combined with other factors, led to the Emergency of 1975.

The lesson that should have been learned: Oil supply can be cut off for political reasons with zero warning. Dependence on a single region is a strategic vulnerability.

What India did: Very little structurally. Oil exploration was increased marginally through ONGC, but no fundamental shift in energy policy occurred.

1979-1980: The Iranian Revolution — When Regime Change Means Oil Chaos

The parallels with 2026 are almost eerie. In 1979, the Iranian Revolution overthrew Shah Mohammad Reza Pahlavi. Iran's oil production collapsed from 6 million barrels per day to virtually zero. Then Iraq invaded Iran in 1980, further disrupting regional supply.

Oil prices doubled from roughly $14 to $35 per barrel. The global economy, still recovering from the 1973 shock, plunged into another recession. Inflation soared worldwide.

For India, the 1979-80 crisis was far more damaging than 1973. By then, oil consumption had grown significantly as industrialization accelerated. The oil import bill surged, contributing to the fiscal pressures that would eventually culminate in the 1991 balance of payments crisis.

The lesson that should have been learned: Iran specifically is a linchpin of global oil supply. When Iran is destabilized, the world pays.

What India did: Began building the Bombay High offshore oil platform and increased ONGC's mandate. These were positive steps but wholly insufficient relative to the growing dependence.

1990-1991: The Gulf War — Saddam, Kuwait, and India's Evacuation

In August 1990, Saddam Hussein invaded Kuwait. Oil prices spiked from $21 to $46 per barrel — a 120% increase. The crisis triggered a global recession.

For India, this crisis was personal. Over 170,000 Indians were stranded in Kuwait and Iraq. India executed the largest civilian airlift in history — Operation Safe Homecoming — evacuating its citizens using Air India aircraft. The scenes of desperate Indians fleeing Kuwait City are seared into the national memory.

The 1990 oil shock, combined with the loss of remittances from the Gulf, pushed India's foreign exchange reserves to a critical low of barely two weeks of import cover. This directly precipitated the 1991 economic crisis, which forced India to pledge its gold reserves and accept IMF conditionality — but also triggered the economic liberalization that transformed the country.

The lesson that should have been learned: India's citizens in the Gulf are hostages to regional instability. Remittance dependence compounds oil dependence. Strategic reserves of both oil and foreign exchange are non-negotiable.

What India did: Liberalized the economy (a silver lining), but oil import dependence continued to grow as economic growth accelerated demand. The Strategic Petroleum Reserve program wasn't even conceptualized until decades later.

2003-2008: The Iraq War and the Commodity Supercycle

The US invasion of Iraq in 2003 initially disrupted Iraqi oil production but didn't cause an immediate spike. However, the removal of Iraqi supply from the market, combined with surging demand from China and India, set the stage for the great oil price run-up of 2004-2008.

Oil climbed from $30 in 2003 to $147 in July 2008 — a nearly five-fold increase. India's oil import bill exploded, fuel subsidies ballooned, and the fiscal deficit widened dangerously. The government was forced to raise petrol and diesel prices multiple times, sparking protests.

When the global financial crisis hit in September 2008, oil crashed to $32. The immediate pressure lifted, and once again, the structural vulnerability was forgotten.

The lesson that should have been learned: Oil price spikes are inevitable in a world of constrained supply and growing demand. India's subsidy-dependent fuel pricing system is fiscally unsustainable during price spikes.

What India did: Began the painfully slow process of deregulating fuel prices (completed for petrol in 2010, diesel in 2014). Started building strategic petroleum reserves at Visakhapatnam, Mangalore, and Padur — but with a pathetically small capacity of 36.87 million barrels, covering roughly 10 days of import needs.

2026: Operation Epic Fury — The Crisis That Combines Everything

The 2026 Iran war is not just another oil crisis. It combines the worst elements of every previous one:

• Political weaponization of oil (like 1973): Iran's closure of the Strait of Hormuz is a deliberate strategic response to military attack.
• Regime change in Iran (like 1979): The killing of Supreme Leader Khamenei has created a power vacuum with unpredictable consequences.
• Mass evacuation of Indian citizens (like 1990): Over 3 lakh Indians have already been evacuated from the Gulf, with approximately 1 crore still in the region.
• Price shock on a growing economy (like 2003-2008): India's oil demand is far higher than during any previous crisis, magnifying the economic impact.

And the numbers are worse. India now imports 90% of its crude oil — up from roughly 70% in 1990 and 80% in 2008. The strategic petroleum reserve, despite decades of discussion, covers only about 25 days of imports. India's 330 million households are more dependent on LPG, petrol, and diesel than ever before.

Why India Never Learns

The pattern is unmistakable: crisis hits, prices spike, the nation suffers, politicians make speeches about energy independence, oil prices fall, everyone forgets, dependence grows, and the next crisis hits harder.

Why does this cycle repeat?

Short political memory: Indian elections operate on five-year cycles. Energy security investments — nuclear plants, strategic reserves, renewable infrastructure, public transport — take decades to pay off. No politician gets credit for a crisis that didn't happen.

The subsidy trap: India's fuel subsidy system — even after partial deregulation — insulates consumers from price signals during normal times. When petrol is artificially cheap, there's no incentive to buy efficient cars, invest in public transport, or switch to electric vehicles. The pain is deferred until it arrives all at once.

Vested interests: India's oil marketing companies, auto manufacturers (until recently focused exclusively on internal combustion engines), and the broader fossil fuel ecosystem resist structural change. The lobbying power of the status quo exceeds the diffuse benefits of energy transition.

The GDP growth distraction: When the economy is growing at 6-7%, energy vulnerability feels abstract. Oil is available, the lights are on, and LPG is delivered on time. The vulnerability only becomes visible during a crisis — by which time it's too late to address.

What Should Have Been Done

If India had, after any of the previous crises, implemented a comprehensive energy security strategy, the 2026 shock would be manageable rather than devastating:

• 90-day strategic petroleum reserve (like the US, Japan, and South Korea maintain): This alone would have eliminated the urgency of the current crisis.
• Aggressive renewable energy deployment starting in the 2000s instead of the 2020s: India has some of the best solar irradiance in the world. A serious push two decades ago would have reduced oil dependence by 15-20%.
• Electrification of transport: India has 300 million two-wheelers. If even 30% were electric, the oil demand reduction would be substantial.
• Nuclear energy expansion: India's nuclear program has been hamstrung by bureaucracy, liability laws, and public opposition. A serious expansion could have provided baseload power that currently comes from imported gas and coal.
• Urban public transport: Most Indian cities have abysmal public transport. Every person in a car instead of a bus or metro represents unnecessary oil consumption.

The 2026 Test

The question now is whether 2026 will be different. Whether the sight of Brent at $120, LPG at Rs 913, and 3 lakh evacuees will finally force the structural changes that five decades of warnings could not.

The early signs are mixed. The government has announced accelerated renewable energy targets and emergency funds for solar manufacturing. Electric vehicle incentives have been expanded. These are positive steps.

But the history of oil crises teaches us that the urgency fades with the price. When Brent eventually retreats to $70-80 — as it will — will India continue building solar plants and strategic reserves? Or will we, once again, declare victory and wait for the next crisis?

The 330 million households paying Rs 913 for LPG today deserve better than a cycle of crisis and complacency. They've deserved better since 1973. The question is whether this time — finally — the lesson will stick.

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