ABSTRACT
The majority of Opec members resorted to the netback system and the spot market prices to dispose of their crude oil. The outcome was the collapse of the oil price structure during the middle of 1986. The Iraqi-Iranian War has seriously affected the oil production and export capacity of both countries, for they destroyed each other's production and, more disastrously, loading facilities in the Persian Gulf ports and outlets. Customers would pick up the oil, either from the tankers at sea or from the land storage stations. The various departments of the US Government agreed that oil imports were constantly increasing while domestic production was steadily declining. Basic economic forces brought on the Opec crisis that began at the end of 1981 and still persisted in 1987. When oil prices were low, its use in the home, in transportation, and in industry constantly grew. No serious efforts were made to find and develop alternatives for oil.
