How did the Gulf War change oil prices?
OPEC attempted to stabilize oil prices from 1982 to 1985 by setting lower production quotas for each nation. These attempts failed however, as most nations continued to produce above their quota and OPEC lacked mechanisms to enforce the behavior of its members. To counter this problem, Saudi Arabia would often cut its production below quota levels to balance out the over-production of other nations and keep prices at the current level. In August 1985, Saudi Arabia ceased this behavior and increased production from 2 million to 5 million barrels per day, which caused oil prices to fall below $10 a barrel in 1986. Prices remained low despite OPEC’s attempts to set higher oil prices, but in 1990, prices spiked due to the Iraqi invasion of Kuwait and the following Gulf War. After the war, oil prices declined steadily and in 1994, inflation adjusted prices were at their lowest levels since 1973. Prices then increased as world oil consumption increased by 6.2 million barrels a day, spurred b
