Alexander Hay

Saudi Arabian Oil Policy and the Iran-Iraq War Alexander Hay

Saudi Arabian oil reserves are the largest in the world. This fact takes on vital significance in light of the Saudi's financial position. Historically, Saudi Arabia has had rather limited financial needs which has allowed it to vary its production according to Saudi desires rather than by necessity. This has placed Saudi Arabia in the theoretical position of dominant producer within OPEC, with the ability to lower production to support OPEC pricing policy in weak markets, and raise production in order to punish members whose actions go against the wishes of OPEC or Saudi Arabia. However, Saudi Arabia has often been forced to take actions concerning oil policy which have been decidedly against its long term economic interests, and furthermore, against its long-term political interests as well. The three main examples of this phenomena are the Saudi policy reversals of 1979, 1982, and 1986. This book attempts to explain the reasons behind Saudi oil policy.