Oil is the main source of energy in the world and is expected to remain so for the coming decades. As technology changes our environment today, oil did so in the 1920s and 1930s. Since then, crude oil has become the primary raw material of every economy, whether developed or developing . Changes in crude oil prices have positive and negative implications on every economy. When these price changes are severe, one can easily conclude that an economy is going to face problems such as adverse supply shocks or, according to the theory, adverse supply shocks. When this kind of problem occurs in the global oil market, it is usually referred to as a global oil crisis. The world has witnessed two major oil crises and is currently facing another. In order to discuss the recent oil crisis and its economic implications, I will refer to relevant economic theory and will also examine the two previous oil shocks around the world. As I mentioned earlier, the major problem an economy faces during every oil crisis is negative supply shock. Adverse supply shocks are unexpected events that reduce aggregate supply and, as a result, output decreases and prices increase. In economics parlance, we call this stagflation. Additionally, I will refer to the organization that caused the three supply shocks so far. OPEC, the Organization of the Petroleum Exporting Countries, has the power to control global oil prices by reducing the global supply of oil. This is what happened during the oil crisis in the early 1970s (Mankiw 252). OPEC's oil supply reduction had instantly doubled the world price of oil. As I said before, this caused stagflation in all oil-importing countries. In addition, I will refer to American statistics on the oil crisis that occurred in the early 70s. In 1974, the variation in the price of oil was 68%, which led to inflation of around 11% and a variation negative unemployment rate from 4.9% to 5.6%. (Mankiw 253) For example, we had the same impact on the economy during the crisis that took place in the 80s, such as double-digit inflation rates and high unemployment. These 100% changes in the price of oil caused negative supply shocks to the U.S. economy. The main negative effects of the adverse supply shock are described as follows: an upward shift in the short-run aggregate supply (SRAS) curve, a decrease in the level of production, and an increase in prices. In order to get a clearer idea of ​​what is happening in each economy, I will carefully examine the graph where these changes can be observed. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayAfter drawing the appropriate graph, it is much easier to analyze the economic implications of a negative supply shock caused mainly by the oil crisis. It is obvious to see the changes that have been made to the economy with the rise in oil prices. We have an upward shift in SRAS from point P1 to point P2, caused by the increase in price. Moreover, this change shifted production from point Y1 to point Y2 and initiated stagnation, which is the main impact on the economy of the oil crisis. Additionally, it is interesting to analyze the economic implications of the additional petrodollars earned from rising prices. I will refer to an article containing..