The Worst Commodity Price Shocks in Modern History | History Hit

The Worst Commodity Price Shocks in Modern History

Harry Sherrin

17 Mar 2022
Petrol station attendants stand beside a sign reading 'SORRY NO GASOLINE'. Taken during the oil price crisis of 1973.
Image Credit: Hum Historical / Alamy Stock Photo

A commodity price shock is a substantial increase or decrease in the cost of a commodity, typically over a very short period of time.

Historically, dramatic price fluctuations have been precipitated by upheavals or conflict, as happened in 1973, when the Yom Kippur War led to a trade embargo on oil that caused energy prices to skyrocket.

Broader financial crises have also led to rapid commodity price shocks in the past, as was seen during the post-Napoleonic depression of 1815-1816, and after the 2007 financial crisis, when food and oil prices shot to record highs.

Here are 6 of the most severe commodity price shocks in modern history.

1. Grain (1815-1816)

After the end of the Napoleonic Wars, Europe and the United States sank into an economic depression. This led to a social crisis in Britain as economic policies forced the working classes to shoulder the brunt of the depression.

In England after the Napoleonic Wars, for example, Lancashire’s textiles industry saw wages plummet as industrialists, faced with a worsening market, cut wages to save profits. In 1818, weavers could expect to be paid a third of what they would have earned in 1803.

British emigrants aboard a ship to Canada, seeking to escape the post-Napoleonic depression. Color illustration by Charles W. Jefferys.

Image Credit: GRANGER / Alamy Stock Photo

This dire situation for Britain’s working class was worsened by the passing of the first of the highly controversial Corn Laws in 1815. Seeking to promote British grain, tariffs were placed on foreign cereals. This saw the price of bread rocket in Britain, leading to famine and further economic strain.

The shock of the post-Napoleonic Depression was also witnessed in Ireland, where the price of grain plummeted by roughly half, and in the United States, where the 1819 ‘panic’ saw unemployment, inflation and bankruptcy rates worsen.

2. Oil (1973)

The 1970s witnessed several oil price shocks, as tensions and conflicts in the Middle East saw prices alternately rise and plummet. 1973 witnessed the decade’s most severe energy crisis.

In October 1973, the Organization of Arab Petroleum Exporting Countries (OPEC) withheld oil from a number of nations around the globe due to their support of Israel in the Yom Kippur War against Egypt and Syria.

The embargo was announced after US President Richard Nixon ordered Congress to offer substantial financial aid to Israel. It applied to the US, the UK, Japan and various Western European countries.

The price of oil, and by extension petrol, almost quadrupled. In Britain, transport costs jumped, so trade unions petitioned for an increase in wages. Coal miners went on strike, and the commercial consumption of electricity was subsequently rationed to three days a week.

In Belgium, Holland and West Germany, a ban on driving on Sundays was implemented. As a result, citizens were seen picnicking on motorways and riding horses around city streets.

Eventually, in March 1974, the embargo was lifted. But the spike in oil prices endured for years after.

Hackney cabs being used as an alternative means of transportation during the Sunday driving ban that was implemented in Belgium, Holland and West Germany in 1973.

Image Credit: dpa picture alliance / Alamy Stock Photo

3. Oil (2007-2008)

The 2007-2008 financial crisis precipitated the Great Recession, the worst economic downturn since the Great Depression of the 1930s. It affected different countries and commodities at different times after the initial collapse of the US housing market.

Oil prices actually continued to rise into 2008, hitting a record high of $145 per barrel in July of that year. But then oil primes plummeted. By the end of the year, a cost of a barrel had decreased by roughly a third, to $43.

This drop in price was caused, atleast in part, by the financial crisis, which triggered a contraction in credit. Also, as people around the globe tightened their purse strings in response to the worsening economic situation, the demand for oil decreased.

In response to this downturn, OPEC reduced its output of oil, hoping to drive prices back up. By the end of 2011, a barrel of oil was worth $91.

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4. Food (2007-2008)

The 2008 financial crisis also triggered price shocks of several other key commodities, including foodstuffs. But the 2007-2008 food price crisis wasn’t caused solely by the financial crisis: a perfect storm of political, economic and environmental problems led to a sharp increase in food prices.

The rising price of oil was at least partly to blame. As mentioned, it rose to a record high in July 2008. This increased the cost of cereals because agriculture traditionally demands relies on large amounts of fuel. Also, with oil prices skyrocketing, nations pursued alternative energy sources, including biofuels derived from maize. This in turn further increased the price of cereals.

Meanwhile, fluctuations in the price of other grains and pulses were more pronounced after the financial crisis. Surges in the price of grains such as rice forced rice-producing nations to reduce rice exports and hoard supplies. This triggered panic buying in other nations and a further increase in prices.

The weather was also a factor. Droughts in Australia in the mid-2000s and a poor harvest in Ukraine also exacerbated price shocks for foodstuffs.

Ultimately, the food price crisis of 2008 saw the cost of cereals increase to almost three times their levels in the year 2000.

5. Oil (2022)

‘No Fuel’ sign on the forecourt of an ESSO Petrol Station in Wiltshire, UK, 2021.

Image Credit: Andrew Harker /

In response to Russia’s invasion of Ukraine in February 2022, a coalition of nations around the globe enforced economic sanctions on Russia. One of the key Russian exports to be hit was oil.

At the time of the invasion, several Eastern European countries relied on Russia for more than half of their oil imports, and the country was one of the world’s biggest exporters of crude oil. With its highly profitable oil markets crippled by economic sanctions, energy prices soared.

In early March 2022, oil prices hit record highs: Brent crude prices hit a 10-year high of around $120 per barrel. With this rise in oil prices came an increase in energy prices, from European natural gas exports to Australian coal.

6. Grain (2022)

The war in Ukraine also led to a steep rise in the cost of wheat. Ukraine, nicknamed ‘the breadbasket of Europe’, is one of the world’s principal producers of grain. As the conflict reduced exports, with trade and transport infrastructure shutting down across the country, the cost of grain began to rise.

In early March 2022, the price of wheat reached its highest level since 2008, costing around €400 per ton in France.

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Harry Sherrin