History Discussion

The Petroleum Era and the “Oil Wars.” Oil has played a crucial role in the rise and development of modern capitalism and business; in national strategies, global politics, power, and war; and as the source heretofore powering the industrial world and economic growth. Events in the oil-rich Middle East have dramatically shaped access to this coveted resource, and six significant international oil crises unfolded in the second half of the twentieth century:

The nationalization of Iran’s oil industry in the early 1950s led the U.S. and Britain to back a countercoup restoring the pro-Western Shah to power.
The second postwar oil crisis soon followed during Nasser’s 1956 nationalization of the Suez Canal, the seaway that traditionally linked Europe not only to India but also to Persian Gulf oil. Nasser’s victory, combined with the extraordinarily rapid growth of the oil industry (both in demand and supply) in the 1950s and 1960s, led Middle Eastern and other oil-producing governments to seek a greater share of oil revenues. In 1960, OPEC formed.
When the Arab countries withheld oil in an attempt to punish the United States for its support of Israel during the Six Days War of 1967 (the third oil crisis), stock reserves and increased output by the U.S., Venezuela, Iran, and Indonesia made the embargo a failure, and the counties that instituted the embargo turned out to be the biggest losers due to lost revenue.
When the Arab countries again wielded the oil weapon during the 1973 October War (the fourth and most significant oil crisis), the outcome was much different than it had been in 1967. This time the embargo severely restricted already tight supplies of oil, and as the price per barrel shot from $2.90 per barrel in September 1973 to $11.65 in December 1973, exporting nations discovered they could reduce volumes and still make more money. What resulted was an unprecedented transfer of wealth from consumers to producers. According to Daniel Yergin’s The Prize, although the Arab countries eventually ended the embargo in 1974, the stoppage and price increase “recast the alignments and geopolitics of both the Middle East and the entire world. It had transformed world oil and the relations between producers and consumers, and it had remade the international economy” (632).
When the Iranian Revolution (the fifth oil crisis) removed Iranian oil from the international market in 1978-79, it only caused a four-to-five percent loss of supply, yet the price of oil increased 150 percent as a result of panic buying to increase inventories. Nonetheless, demand was lower by the late 1970s, and 1981 marked the last time OPEC prices went up for a decade.
Demand grew vigorously at the end of the 1980s, conservation slowed, and dependence on the Persian Gulf increased. When Iraq invaded Kuwait in 1990 and created the sixth major postwar disruption of the oil supply, “Oil was fundamental to the crisis, not ‘cheap oil,’ but rather oil as a critical element in the global balance of power, as it had been ever since the First World War. Such is one of the great lessons of the twentieth century” (Yergin, 774).

To restore access to Kuwaiti oil and to protect other oil-rich Gulf States from further Iraqi expansion, in 1991, the U.S. (which has 5% of the world’s population but consumes 26% of the world’s oil resources) led an international coalition to drive the Iraqi occupying force out of Kuwait and back into Iraq. At the time, Professor Eric Hoogland predicted, “The political, social, and economic consequences of the U.S. assault on Iraq, and the Iraqi regime’s consequent assault on its own people, will afflict the region and the world into the next century” (As quoted in William Cleveland and Martin Bunton, A History of the Modern Middle East, 5th ed., 487).

What were the consequences of the Gulf War of 1991?

The book : A History of the Modern Middle East, Sixth Edition by William Cleveland.

Assigned Chapters : 20, 22, 23, 24 & 25

Please only quote from assigned chapters.