Impact of international oil prices fluctuation on the Kuwaiti economy.
The Kuwaiti economy has experienced severe fluctuations in oil
revenues since late 1973. The sharp rise and fall in oil prices marks two
distinguished periods in the economic history of the oil producers. First, the
period 1974-1981, which is regarded by many as the boom years. Second, the
period following 1982 when oil prices slumped and the oil producers went into
severe receSSIons. Since late 1982, the Kuwaiti economy experienced a sharp
tum around due to the fall in oil prices and the reduction in quantities of
The future development in Kuwait would, no doubt depend on the
behavior of oil prices and the quantity exported per year. A rise in export prices
at higher rates relative to that of import prices is a real trade gain. However, the
fluctuations in oil prices would have serious impacts on the path of economic
development of the country.
The objectives of this study are; examInIng the behavior of oil prices
over the last four decades, analyzing the world demand-supply relationship for
crude oil, investigating the impact of fluctuations in oil prices on the interaction
between the Kuwaiti economy and those of its major trading partners,
examining the effects of the fluctuations in oil prices in the resources balance of
the Kuwaiti economy, analyzing the impact of fluctuations in oil prices on the
pattern of Kuwaiti imports, investigating the future development in Kuwait
under various assumptions regarding the behavior of oil prices and the quantity
of oil exported.