Iraq May Put a Severe Squeeze on Oil-Dependent U.S., Analysts Warn : Economy: The fallout from the invasion is likely to be enormous and long-lasting.

Iraq’s sudden invasion of oil- and cash-rich Kuwait gives new meaning to the term hostile takeover.

By storming Kuwait this week, debt-ridden Iraq sought not only to advance an array of foreign policy and ideological interests but to escape a financial squeeze that was growing ever tighter around its neck.

In the longer run, U.S. analysts warn, it may have settled an equally dangerous economic noose around the neck of United States and other energy-dependent nations.

“This is a war for control of some of the world’s most valuable resources,” said Philip Verlerger, an energy specialist at the Institute for International Economics.

To be sure, Mideast specialists say economic need was by no means the only motive for Iraqi President Saddam Hussein’s drive into Kuwait. Among other things, he has long harbored ambitions of succeeding the late Egyptian President Gamal Abdel Nasser as supreme leader of the Arab world, and--as an implacable foe of Israel--he has resented the relatively moderate policies of Kuwait, Saudi Arabia and the other sheikdoms of the Persian Gulf.

But the economic fallout from the Iraqi invasion is likely to be enormous and long-lasting, both for Iraq and for many other nations.

Iraq’s eight-year Persian Gulf War against Iran left Hussein with a battered and impoverished populace and debts totaling $72 billion to $80 billion--as well as with one of the larger military forces in the world.

Only a vast increase in oil revenue could satisfy the pressing demands of his bankrupt nation. In a single day of lightning-fast military action, Hussein may have given himself just that.

Some analysts say the latest in a long line of Middle East wars suggests that the world is now on the brink of another oil shock similar to those that wreaked havoc in 1973 and 1979.

However, many energy analysts disagree, saying the real danger is not that oil prices may head sharply higher right away. Instead, they argue, the most serious threat from Iraq, assuming it does not sweep across Saudi Arabia too, actually lies four or five years down the road when the Organization of Petroleum Exporting Countries will be in a far better position to squeeze the industrial world’s oil lifeline.

“There are upward pressures on the price of oil, but I think that it will stay close to where it is now,” said Charles Maxwell, senior energy strategist for C. J. Lawrence Morgan Grenfell in New York.

Patrick Connolly, senior consultant for Cambridge Energy Associates in Cambridge, Mass., agrees: “It is not in (Hussein’s) interest to try to raise prices any higher since he can now generate much greater revenues from the combined production of Iraq and Kuwait. But later in the decade, it could get much worse. What he has done is establish himself as the military and economic swing factor in the Middle East and signaled to OPEC who’s in charge.”

In the weeks leading up to the invasion, Iraq first relied on threats to persuade Kuwait and other small Arab states to restrict production in an initially successful effort to drive up the depressed price of OPEC’s oil to at least $21 a barrel.

“Having reached an OPEC agreement with saber rattling, Iraq’s invasion was a big surprise to many of us,” conceded Cheryl J. Trench, executive vice president of the Petroleum Information Research Foundation in New York.

Yet, with one thrust, Iraq has nearly doubled its control of oil reserves--to 20% of the estimated world supply--and laid claim to Kuwaiti global investments worth at least $80 billion.

Kuwait, which showers annual oil profits of $4 billion to $6 billion on its 2 million citizens, has long been a tempting target for Iraq.

Moreover, Kuwait’s huge oil earnings that have been invested abroad over the past two decades bring in at least another $6 billion a year, according to U.S. officials. Although much of that investment is theoretically set aside for future generations of Kuwaitis, similar promises in the business world have not necessarily prevented corporate raiders from tapping big pension surpluses to pay off the costs of acquiring their targets.

Western powers, led by the United States, are seeking to deny Hussein these spoils of war by freezing Kuwait’s assets abroad.

But many analysts argue that, short of military action on the part of the Western allies to topple Hussein, Iraq is unlikely to retreat from its apparent goals of bleeding Kuwait dry and, in the longer run, pushing up the price of oil.

While Iraq’s newly won power inside OPEC may not pose immediate economic dangers for the Western industrialized nations, there is little doubt that it promises to usher in a far more unstable era.

“The West now faces a highly politicized OPEC dominated by a man who reminds me of Adolf Hitler,” Verlerger said. “We could deal with the problem now, but I doubt we will. That means we’ll have to deal with him later.”

For the present, analysts point out, supply-and-demand conditions favor the oil-consuming countries over producers. But not for long: If world demand continues to grow at the recent 1.5% rate from its present level of about 64 million barrels a day, today’s oil surplus could vanish within the next few years.

In the past, non-OPEC countries such as Mexico, Britain and Norway have met much of the world’s extra demand, boosting their output by roughly 1 million daily barrels each year. But that trend has been on the wane for four years, while the Soviet Union, the world’s largest oil producer, appears to face an irreversible decline because of outdated technology and labor unrest.

That would leave OPEC, perhaps totally under Iraq’s thumb if Saudi Arabia is intimidated by Hussein’s military power, as the only source of additional supply.

“The United States cannot tolerate the domination of the Persian Gulf by any one power hostile to Western interests,” said Robert E. Hunter, a former National Security Council staff member and current Middle East senior fellow at Georgetown University’s Center for Strategic and International Studies.

“This is the warning bell in the night,” Hunter added, “and we will have ourselves to blame if we don’t take the action we have to (to lessen U.S. dependence on OPEC oil)--and take it now.”