PLEASE CORRECT ME IF IM WRONG. Another reason why the oil price start to decline from $140+ is because some of the country like Iran they buy oil from OPEC using Euro dollar instead of US dollar. That why Bush want to attack Iran and attach other country that not using US dollar to buy oil.
No, Oil above $140 was dampening consumption of motor fuels in the 27 nations advised by the Paris-based IEA. Oil price above $140 was too much. http://smarteconomy.typepad.com/smart_economy/2008/07/why-oil-prices.html Later oil price declined because of recession , fear and panic, while US$ strenghtened against Euro.
I thin you're on the right track here. You just found the real reason for the second Iraq war. Saddam was selling oil in Euros. If the worlds most traded commodity suddenly shifted from US dollars to Euros it would force foreign governments to higher reserves of teh Euro and thus reduce the demand for the US Dollar. This is bad for the US dollar. This is why the US will attack Iran (Iran just opened an new Bourse that trades oil in Euros among other currencies) and the first thing they will do is switch the trade of oil back to US dollars.