What Is an Embargo?

By Jeremy Bowman – Updated Sep 5, 2025 at 12:18 PM EST

Key Points

Embargoes are official trade bans that can target all or specific goods to exert political influence.
These measures can isolate both the targeted and the enacting country, impacting global economic relations.
Historically, embargoes like the 1973 oil crisis have prompted negotiations, impacting resource prices long-term.
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Trade is crucial to the global economy. But it's not just an economic driver but also a political tool. Free trade can be used to strengthen relations between two or more countries. However, the opposite could also happen in trade relations since trade can be restricted for coercive reasons or as punishment. This is known as an embargo.

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United States American trade embargo represented by U.S. flag on a wooden door locked with a padlock. — Image source: Getty Images.

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The embargo banned oil exports to countries supporting Israel and also cut oil production. The move led to gasoline shortages and rationing in the U.S., meaning the embargo essentially accomplished its economic goal.

Oil is an essential resource in the modern economy for transporting both people and goods. The embargo drove oil prices from $2.90 a barrel to $11.65 in just a few months.

The embargo only lasted a few months, but the higher oil prices that resulted from it remained. As a geopolitical strategy, there is some evidence that the embargo helped get the U.S. to negotiate an end to the war. Like other economic tactics, embargoes intending to change behavior work best when they target a valuable resource.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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