Second Oil Crisis

The Iranian Revolution of 1979 toppled the Shah and brought Ayatollah Khomeini to power. Iran, one of the world's largest oil producers, saw its output collapse almost overnight. Then in September 1980, Iraq invaded Iran, triggering a war that would last eight years and further disrupt Middle Eastern oil supplies. The result was a second global oil crisis within a decade — even more severe in some respects than 1973.

For India, the impact was severe. Petrol prices rose sharply, inflation surged, and the current account deficit widened dangerously. The government was forced to seek IMF assistance and implement austerity measures.

Gold, already rising through the late 1970s, hit ₹1,330 per 10 grams in 1980 — an extraordinary 800% increase from ₹88 at independence just 33 years earlier. The pace of gold's rise reflected both the global inflationary environment and the deep-rooted Indian preference for physical gold as a store of value when all other certainties fail.

The two oil crises of the 1970s-1980s fundamentally shifted how India approached energy security — eventually driving domestic oil exploration at Bombay High, investments in energy efficiency, and a long-term push for energy diversification. They also demonstrated that India's commodity prices were inextricably linked to geopolitics thousands of kilometres away.