"Iraqi Strategy Turns OPEC Toward Higher Prices", Petroleum Intelligence Weekly, July 30, 1990.

 

Main Point

Although Iraq’s aggressive strategy has worked in lieu of a compromise to limit oil production and increase oil prices, the quota issue is likely to resurface.

 

Summary

Iraq’s aggressive tactics has caused a halt in quota jockeying from any other OPEC members, especially Kuwait and the United Arab Emirates whose expected claims for higher quotas were stifled.  Unlike Saudi Arabia’s previous threats to flood the oil market, which have lost their strength since flooding the market would hurt Saudi Arabia as much or more than others, Iraq’s “big stick” strategy worked because most producers want higher prices due to revenue needs outstripping income.  It is expected that the OPEC countries will reach an agreement to limit production to 22.5-million barrels a day and raise the price to $20 a barrel.  However, the compromise on prices and production looks hard to sustain and the quota issue will more than likely quickly reemerge. 

 

Summary by Ċetta Mainwaring