SUPPLY: From Output Squeeze to Price Embargo

The gloom that has enveloped the industrialized West since the Arabs unsheathed their oil weapon in October lightened last week. Arab nations announced an easing of their production cutbacks—and around the world, there was growing suspicion that they never did slash oil output as much as they had proclaimed. Europe, heavily dependent on Middle East oil, seems surprisingly well supplied, and TIME uncovered evidence that Arab petroleum has been leaking into the U.S., too, despite a supposedly total embargo.

None of this means that the energy crisis is anywhere near over; indeed, all indications are that it will...

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