In this context, an OPEC meeting was held in Caracas in December 1970, which formulated a wide range of demands that the oil companies present an acceptable offer within a provocative period of time and, if not, threaten to act immediately together. When the stage moved to Tehran, negotiations continued between OPEC and a joint industrial group that was negotiating on behalf of all. In February 1971, the Tehran Agreement was extended under the constant threat of OPEC to adopt its demands by the common government and stop production for any company that did not comply. Roughly speaking, the published price for production in the Persian Gulf was increased by 35 cents (compared to 30 cents for Libya) and would increase by about 11 cents per year until 1975. The tax rate has been increased from 50% to 55%. The governments acknowledged that, on the basis of the next round of negotiations on Mediterranean oil, there would be no leap to the demands of the Persian Gulf and that the agreement would last until 1975. The spokesmen of the producing countries publicly stated in Withal that the increase in public payments does not require an increase in consumer prices, given the increases in the price of products already in force; and it was implied that the stability of tax regimes would depend on future developments in world prices. The concession system gave companies the right to explore, own and produce oil in an area. In contrast, nationalization in Russia, Mexico and Iran had handed over ownership of oil to states. Participation or co-ownership was a compromise that many countries were striving for.
To ensure market access, Yamani warned against total nationalization. In October 1972, the Gulf States signed a participation agreement with companies, which provides for an immediate participation of 25%, which was to increase to 51% by 1983. A man who was reading about gasoline rationing at a gas station in 1974. (Source: NARA/Wikipedia) On October 16, 1973, the Gulf Six unilaterally raised the price of oil from $3.01 to $5.12 per barrel, an increase of 70%. The next day, Arab oil ministers decided to use the «oil weapon» against states that supported Israel, including the United States, the Netherlands, Portugal, Rhodesia and South Africa. The embargo provided for a 5 percent reduction in oil production from September`s level, with further cuts of 5 percent per month until the Arabs` political goals had been achieved. (In reality, the planned additional reductions of 5% per month have not been made.) On October 19, President Nixon publicly announced $2.2 billion in military and financial aid to Israel. Within a day or two, Arab countries have completely halted oil deliveries to the United States, although Iran and Iraq have not adhered to the embargo.
On 22 October, the United Nations negotiated a ceasefire which entered into force on 25 October. Yet the war has pushed up oil prices again; On December 22, 1973, an OPEC meeting set the price of oil at $11.65 per barrel. The Shah of Iran, who had organized the meeting in Tehran and proposed the new prize, applauded. In 1970, oil exports generated $7.7 billion for OPEC governments; By 1974, that turnover had risen to $88.8 billion; the era of the petrodollar economy (for good or bad reasons) had begun….