Ahmed Zaki Yamani

During the Yom Kippur War, Yamani took the initiative and planned to drop oil production initially by 10 percent alongside other OPEC members, followed by 5 percent reductions each month.[13][14] On 16 October, the six Persian Gulf members of OPEC met in Kuwait and took the decision to raise oil prices from US$3 to $5.12.[15] This was the first time the producer countries had independently set the price of their oil. On the next day, the ten OAPEC members agreed to Yamani's moderate production cutback proposals.[15] An embargo to countries seen as "hostile" was also recommended but not enforced, although by 22 October all OAPEC countries had placed an embargo on the United States, the Netherlands, and Denmark.[16]

The production cutbacks, increased to 25 percent in November, affected the economic health of all Western powers.[17][18] To gain political support, Yamani travelled through Europe, the United States, and Japan with Algerian oil minister Belaid Abdesselam.[18][19] Both Yamani and OPEC became well known in the West, with Yamani described as "the man of the moment" in Newsweek International's 24 December 1973 cover article.[20] Attempts by the United States at bringing together a consumer's cartel failed, and the EEC and Japan called on Israel to withdraw from Arab territories occupied in 1967.[21][22]

On 22 December, the Persian Gulf members of OPEC met again in Tehran where the Shah, backed by the other states, urged that the price of oil be raised to over $20 a barrel.[23][24] Yamani opposed this extreme increase, but could not contact Saudi Arabia from Tehran. Fearing a split in OPEC, Yamani decided on a compromise that put oil at $11.65, four times the price of a barrel prior to 16 October.[25][26][27] Following progress with Arab-Israeli disengagement agreements, a decision was taken to end the embargo, which was formally lifted on 17 March 1974.[28]

Saudi Arabia continued to push for price reductions from the $11.65 level, opposed by other OPEC members. This increasingly came to be seen as a pro-American stance by the other producers, although defended by Yamani as a safer option for the world economy. Saudi Arabia has been criticised for using its dominant position to force its own interests and its long-term production strategy, as a lower price enables the country to keep a high market share and discourages development of alternative energy sources that would curtail the worldwide demand for oil.[29] To this point, Yamani famously said in 1973: "The Stone Age didn't end because we ran out of stones."[30] (However, the quote may have been wrongly attributed by this and other sources.)[31]

On 25 March 1975, King Faisal was shot dead by his nephew Faisal bin Musaid. The young prince had joined a Kuwaiti delegation, led by oil minister Abdul Mutaleb Kazimi, which Yamani had escorted to the King's office. Yamani was standing next to the King when the shots were fired and, after interrogation, it was discovered that Faisal bin Musad also believed Yamani to have been shot dead in the attack.[32] Yamani continued in his role as oil minister for another eleven years after the death of Faisal.[18]

On 21 December 1975, Saudi Arabia's Yamani, Iran's Jamshid Amuzegar, and the other OPEC oil ministers were taken hostage at their semi-annual conference in Vienna, Austria. The attack, which killed three non-ministers, was carried out by a six-person team led by Venezuelan terrorist Carlos the Jackal, which included Gabriele Kröcher-Tiedemann, and Hans-Joachim Klein. The self-named "Arm of the Arab Revolution" group called for the liberation of Palestine. Carlos planned to take over the conference by force and hold for ransom all eleven attending oil ministers, except for Yamani and Amuzegar who were to be executed.[33]

Carlos arranged bus and plane travel for his team and 42 of the original 63 hostages, with stops in Algiers and Tripoli, planning to fly eventually to Baghdad, where Yamani and Amuzegar were to be killed. All 30 non-Arab hostages were released in Algiers, excluding Amuzegar. Additional hostages were released at another stop in Tripoli before returning to Algiers. With only 10 hostages remaining, Carlos held a phone conversation with Algerian President Houari Boumédienne, who informed Carlos that the oil ministers' deaths would result in an attack on the plane. Boumédienne must also have offered Carlos asylum at this time and possibly financial compensation for failing to complete his assignment. Carlos expressed his regret at not being able to murder Yamani and Amuzegar, then he and his comrades left the plane. All the hostages and terrorists walked away from the situation, two days after it began.[33]

Some time after the attack, Carlos's accomplices revealed that the operation was commanded by Wadie Haddad, a founder of the Popular Front for the Liberation of Palestine. They also claimed that the idea and funding came from an Arab president, widely thought to be Libya's Muammar al-Gaddafi. Fellow militants Bassam Abu Sharif and Klein claimed that Carlos received and kept a ransom between US$20 million and US$50 million from "an Arab president". Carlos claimed that Saudi Arabia paid ransom on behalf of Iran, but that the money was "diverted en route and lost by the Revolution".[33][34]

At an OPEC meeting in September 1975 in Vienna, Saudi Arabia continued to oppose sharp increases in the price of oil. Yamani was required to gain approval from Crown Prince Fahd for any increase to be agreed in excess of 5%. Unable to contact Saudi Arabia from Vienna, Yamani left the meeting and flew to London on his private jet in order to find a secure telephone. This incident was widely publicized.[35]

At an OPEC meeting in May 1976 in Bali, Iran and seven other members advocated a 20% increase in oil prices to match inflation, although Saudi Arabia favoured a six-month price freeze.[36][37] The Iraqi oil minister fiercely criticised Yamani and Saudi Arabia for pro-Western policy, which led to Yamani leaving the meeting and demanding an apology.[38][39] This was settled and the six-month price freeze was agreed.[40][41]

Six months later, OPEC assembled in Doha and Saudi Arabia again faced pressure to raise prices. Saudi Arabia and the UAE were the only two member countries not to agree to a 10% increase in January 1977 followed by an additional 5% increase in July. This led to a period of two-tier pricing with Saudi Arabia and the UAE charging $12.09 per barrel and the other OPEC countries $12.70 per barrel.[42] In July 1977, an OPEC meeting in Stockholm ended two-tier pricing, with prices re-unified at $12.70.[43][44][45]

In 1979, the Iranian Revolution resulted in the 1979 energy crisis. Saudi Arabia and other OPEC members managed to increase production sufficiently to replace that lost from Iran, but this did not prevent panic buying of oil. OPEC also maintained an official price, although the spot market led to oil prices being negotiated upward. Yamani claimed that Saudi Arabia would not sell over the OPEC price, but would remain committed to the reduction of oil prices.[1][46][47]

The panic buying during the 1979 energy crisis led to increased oil stocks which began to flood the market and resulted in price wars between oil-producing nations competing for market share. This in turn led to reduced income for Saudi Arabia.[1] On 13 June 1982, in the course of this downturn, King Khalid died of a heart attack and Crown Prince Fahd became King and Prime Minister.[48]

The beginning of Fahd's rule was marred by the reduced oil income caused by the 1980s oil glut.[49][50] The restricted national budget also encouraged the use of oil in barter deals. In 1984, Saudi Arabia purchased ten Boeing 747s to join the fleet of Saudia Airlines, paid for using 34.5 million barrels (5,490,000 m³) of oil.[51][52]

At an OPEC meeting in October 1986, Fahd sent his oil minister a cable demanding Saudi Arabia's oil quota to be increased and the price of oil set at $18, which Yamani refused to sign. On 29 October 1986, a brief announcement was made on Saudi television that Yamani had been dismissed.[2] He was replaced by Hisham Nazer.[53]

In July 1982, Yamani founded Investcorp, a private equity firm, with several other oil ministers and well-known financiers.[54] The firm's initial investments included Tiffany & Co., Breguet, a Swiss watch maker, and Chaumet, a French jeweller.[54][55] Yamani, himself known to be a watch lover, also became majority shareholder of Vacheron Constantin in 1987. In 1996, Yamani's shares were then sold to Vendôme Luxury Group, owned by Richemont.[56][57] In 1988, Yamani established the Al-Furqan Islamic Heritage Foundation under the Yamani Cultural and Charitable Foundation, which endeavours to preserve and publish historically important Islamic works.[58] In 1990, Yamani founded the Centre for Global Energy Studies, a London-based market analysis group claiming to provide objective information on energy issues. Board members have included Edward Heath, Valéry Giscard d'Estaing, and Denis Healey, all of whom were friends of Yamani.[3]