The First Oil War: Implications of the Gulf Crisis in the Oil Market
The issues which provided Iraq with the pretext for its invasion of Kuwait were oil pricing policies and oiI revenues. Of course, Iraq had broader political and regionaL objectives, but its most immediate and pressing concern was to loosen the economic and financial noose that was threatening strangulation. Low oil prices, technicaI limitations on arrent oil output and financial constraints on the investments required to reclaim or expand productive capacity were causing intractable probIems for the government and severe hardship for the population. President Saddam Hussain was finding himself pushed further and further into a corner and tried to get out of it by invading Kuwait. This behaviour was utterly unacceptable and rightly condemned by the international community. But for the purposes of this anaIysis it is relevant to recall that oil was an integral part of the story.