On 25 October 1973, major Western oil companies announced cuts in crude oil supplies, triggering a global surge in crude oil prices and economic disruption. Prices surged in Japan amid a recession caused by yen appreciation, signaling the beginning of the end of the high-growth era.
On 25 October 1973, the major Western oil companies known as the “majors” announced that they would cut crude oil supplies. The Fourth Arab-Israeli War had broken out on 6 October, and on 16 October, Middle Eastern oil-producing countries declared that they would raise crude oil prices by 70% in a single move. In January 1974, crude oil prices rose by a further roughly 70%, to nearly double, and turmoil in the oil market shook the global economy.
The turmoil had a serious impact on Japan following the Nixon shock, which resulted in the decision to suspend the convertibility of gold into US dollars. In Japan, which depended on oil for energy and industrial raw materials, prices surged, followed by a series of opportunistic price increases. The consumer price index rose 23% year on year in 1974, while economic growth that year turned negative for the first time in the postwar period. This helped bring the high-growth era to an end.
Meanwhile, the Nikkei Stock Average closed at ¥4,667.11 on 25 October 1973. The global economy was again disrupted by soaring crude oil prices from 1979 to 1980, leading to a period known as the Second Oil Crisis.