This was the clear result of a tightening in supply, however. Another major fuel price shock occurred as a result of the Iranian Revolution and the subsequent Iran/Iraq War. This again caused a supply shock as two of the world's major oil producing nations were completely destabilized (Williams, 2007).

In the 2000s, a number of factors have combined to drive up oil prices. Major economic gains in key, highly-populated developing markets have served to increase demand substantially. The Iraq War has destabilized that nation's oil supply and the Mideast region in general. A weaker U.S. dollar, another consequence of the Iraq War, has also caused the price of oil -- traded in U.S. dollars -- to rise (Ibid). These events correspond with traditional supply and demand drivers. The events of 2008 may have been the result of speculation, but over the course of the past decade, it is more likely...
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