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The impact of the Iran-Iraq war on the world oil market

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  • Tahmassebi, Hossein

Abstract

The Iran-Iraq war has been one of the main factors contributing to the world oil market's volatility in the last three years. Furthermore, it has helped to undermine OPEC's cohesiveness and market control, resulting in the $5 per barrel (/b) price cut in March 1983. Analysts are now divided on the future course of this war and its probable impact on world oil markets. Some believe that the war will escalate and interrupt the flow of oil from the Persian Gulf. Others believe that if the war came to an end, the increased supply from Iran and Iraq would lead to the collapse of OPEC. These are extreme positions. First, we may have already witnessed the peak in escalation of the war. A peace, de facto or formal, is very likely before the end of 1986. Second, Saudi Arabia and certain other OPEC members are expected to cut back enough of their production to accommodate the 1.0 to 2.0 million barrels per day (MMb/d) increase anticipated from postwar Iran and Iraq. In the process, however, the Saudis may lose their current swing producer role. To preserve OPEC in the face of sharp and unforeseen declines in the demand for oil, a group of member countries may collectively assume the role of swing producers.

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  • Tahmassebi, Hossein, 1986. "The impact of the Iran-Iraq war on the world oil market," Energy, Elsevier, vol. 11(4), pages 409-411.
    • Handle: RePEc:eee:energy:v:11:y:1986:i:4:p:409-411
    DOI: 10.1016/0360-5442(86)90127-1
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    Cited by:

    1. Wang, Xinghua & Lee, Zhengzheng & Wu, Shuang & Qin, Meng, 2023. "Exploring the vital role of geopolitics in the oil market: The case of Russia," Resources Policy, Elsevier, vol. 85(PB).
    2. Xu, Jiaqi & Zhao, Jingfeng & Liu, Wen, 2023. "A comparative study of renewable and fossil fuels energy impacts on green development in Asian countries with divergent income inequality," Resources Policy, Elsevier, vol. 85(PA).
    3. Lin, Boqiang & Omoju, Oluwasola E. & Okonkwo, Jennifer U., 2015. "Will disruptions in OPEC oil supply have permanent impact on the global oil market?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1312-1321.

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