The Iran-Iraq war reduced the production of crude oil in both countries and thus reduced production and supply of crude oil by 6% in the world market. From 1978 to 1981, the highest price was $ 115.34 per barrel. The war between Iran and Iraq lasted for a long time in the 1980s, but oil production in these countries began to recover.
In those years world, oil consumption has significantly decreased. Saudi Arabia has reduced crude oil production to keep the price acceptable to itself, but even a 25% reduction in production failed to maintain a higher oil price. Venezuela, Nigeria, Mexico, and Russia with the increase in supply create overcrowding in the market. The monopolistic collapse of OPEC brought market formation of prices in the oil market. Due to lower demand for oil in relation to the offered quantity of oil, the market reduced the price of oil in a given period.
Between 1981 and 1986 there was a price drop from $ 103 to $ 27 per barrel of oil.
America’s crude oil producers are beginning to use the name “oil shocks.” America accepted the problems that were created with domestic oil producers, but the price of these problems was negligible compared to the US geopolitical goal: to maintain instability in the Arab world and thus postpone peace, stability and the Arab world’s agreement. Peace in the Middle East would have a negative effect on the US’s ability to influence the opportunities there as well as the ability to manipulate oil prices.
The 1991 Gulf War, or US intervention against Iraq, was part of a geopolitical strategy to stabilize oil prices on the world market, which was ultimately successful. The coalition for the first time in its history uses its combined and geopolitical power in order to correct the prices of oil at the time.
Iraq withdraws after US military action from Kuwait. Combining Iraqi and Kuwaiti crude oil production comes up with data indicating that the countries in question produce together 9% of the total available crude oil in the world market in a given period. The price has risen because of the fear that the conflict will spill over to Saudi Arabia. Also, the slowdown of Asian economies (Asian financial crisis) in the 1990s led to a fall in oil prices to just $ 16 per barrel in 1998.