1. ¹International Business Department, George Washington University, Washington, DC, USA
2. ²GREEN (Group de Recherche en Économie de l'Énergie et des Ressources Naturelles), Département d'économique, Université Laval, Québec, Canada

Correspondence: Professor RJ Weiner, International Business Department, George Washington University, 2023 G St NW, Washington, DC 20052, USA. Tel: +1 202 994 5981; Fax: +1 202 994 7422; E-mail: rweiner@gwu.edu

Received 7 August 2003; Revised 4 October 2004; Accepted 21 December 2004; Published online 7 July 2005.

Abstract

Recent years have seen recurring international financial crises, as well as a tremendous rise in trading and speculation. How are the two related? Are speculators and trading responsible for market volatility? This paper presents a study of the Gulf Crisis of 1990–1991, examining the behavior of the international oil market during a period of unprecedented volatility. The analysis suggests that a combination of political events and market fundamentals, rather than trading, was behind this volatility.