“There is a precedent for price hikes to compensate for dollar devaluation, and it is not a comfortable one.”
“The first oil crisis, although prompted by the political furore over the 1973 Arab-Israeli war, and the use of the “oil weapon”, was also a response to the devaluation of the dollar that took place in the course of the breakdown of the Bretton Woods fixed exchange rate system in 1971-73.”
Saudi is at odds with Kuwait and UAE, Saudi wants to cut oil supply to maintain oil prices.
Oil price rises are compounded by fact that OPEC revenues are pegged to dollar and the dollar is very weak and that economic growth in China is increasing demand.
Higher gas prices in the US are not good in run up to election. US needs lower oil prices and more control of pricing.
Iraq plus Kuwait oil reserves equivalent to Saudi’s
The US has played its hand with the Iraq invasion, a stable Iraq mitigates against a fragile Saudi. An unstable US controlled Iraq creates further instability for Saudi Arabia.
De facto, stability in Iraq is now the key to western economic wellbeing.