ABSTRACT
Despite much speculation that the world oil market would encounter a severe oil shortage and world oil prices would rise to as much as $60 a barrel either immediately after the Iraqi invasion of Kuwait or upon outbreak of the Gulf War, the world oil market did not face another supply shock and oil prices stayed at about $15–20 a barrel between September 1990 and February 1991. This is mainly because, Saudi Arabia being under direct threat from Iraq, the United States quickly deployed its forces in Saudi Arabia and in response Saudi Arabia increased oil production from 5.4 million barrels a day (b/d) in July 1990 to 8.4 million b/d from September 1990 to February 1991. These responses by the United States and Saudi Arabia were not surprising, but were to be expected given the nature and framework of the coalition of these parties. In this paper, I apply a coalition theory and explain the Saudi response in terms of the Saudi-U.S. coalition.
