ABSTRACT
This chapter reviews the evolution of the global oil market from the midtwentieth century onwards, with emphasis on the stabilizing influence of the target price framework brokered by the United States and Saudi Arabia in the mid-1980s, whose continued viability has now been cast into doubt. Over the 19 years of its life, this framework was responsible for providing the world with a steady supply of oil at reasonable prices. Naval dominion in the Persian Gulf and alliance with its surrounding governments has been a bulwark of American strategy throughout this period, and it has provided a means to guarantee Europe, Asia, and the United States access to the extensive and reliable oil production in this region. Nevertheless, stability in the global oil market was gained at the cost of lingering political instability in the Gulf, an instability that has given rise to recurring regional wars and Great Power interventions to impose order. In the long run the interests of oil-producing and -consuming states alike require a policy framework that deters military appropriation of Gulf oil wealth, reduces the possibility of nuclear weapons use in the region, and addresses the intertwined nature of regional governance and the growth of terrorism directed against Gulf governments and the US. The American effort to create a democratic government in Iraq, which is ongoing as of this writing, has both illuminated and obscured a larger, more dangerous problem: the international consensus that has reliably produced a steady supply of oil at acceptable prices is itself becoming increasingly unstable.
