question about oil market?

Question

oil went sky high after israel and hezbollah started fighting, and now at the mere THREAT of possible war {iran} oil spirals out of control

My question is: Why didn't oil have a huge jump during the gulf war of 1991, especially considering that the 4th and 2nd most exporting nations were burning their oil wells.

there was a jump in prices, but never to the $30 increases I hear about today if we fight Iran

Answer 1

Oil prices did jump in 1991 from about $18/bbl. to over $40/bbl. when Iraq invaded Kuwait. To compensate, the other OPEC countries ramped up production and crude fell to about $22/bbl. The reason that prices didn't skyrocket when Gulf War I began was because allied forces were doing so well, that traders didn't see any major distruptions. Even though the well were set ablaze, the other OPEC countries were producing enough oil to make up for the shortfall from Iraq and Kuwait. As a matter of fact, the big scare was that OPEC has ramped up production so much that after the war ended, the fear was that oil prices could plummet because of a glut of oil in the market.

Answer 2

Many people talk about the political situation in the Middle East driving oil prices, but I think the main thing moving oil prices is increased demand, particularly from China and India. Also, oil is a finite non-renewable resource. 15 years ago Saudi Arabia had a lot more oil that they do today.

Many believe the world's biggest oil field, Ghawar, in Saudi Arabia is in decline.

http://home.entouch.net/dmd/ghawar.htm

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Answer 3

... excuse me, but oil prices had basically nothing to do with war.