There is more to it than Iraq. First of all the price is set by the commodities market. Meaning the high prices we are paying right now are determined in Chicago and New York. The Arabs don't want our prices to go too high because we will react by becoming more efficient. That would cause the price of oil to drop, less of it to be bought at a lower price means less BMW's and Mercedes for the Arabs. Most of Saddam's neighbors hated Saddam (Iran, Turkey, Kuwait, and the Saudi's) so your arguement that this is in response to Iraq is not grounded in truth.
The commodities market is reacting to two things enviromental policies that make it difficult to refine large quantities of fuel economically and the lack of refining capacity in the US.
Think of this, it would be cheaper to buy gasoline in Kuwait and ship it to here than it would be to buy oil and ship it here and refine it. The reason they don't is because of our enviromental regulations that require boutique fuels for each area. To finish refining the Kuwait, or any other countries fuel to our standards, would be difficult and expensive.
The Canadians and the US have as much oil as OPEC controls. When you factor in Central America, South America, the north sea and Russia, Opec controls less than 1/4 of the oil available.
Another issue on Iraq now is failure is not an option. If we pull out now, the country will turn from democracy and capitalism, to control by extremist Muslims. This will destroy it's chances at being successful. The people will have no oppurtunity to better themselves. It will turn into a breading ground of terrorists in a country rich with oil. They will be able to buy anything they want with the oil money they have. The people of Iraq by a 75% majority do not want the US to pull out now. They want a chance to better themselves and that oppurtunity more than anything scares the other Arab states. That opportunity will kill terrorism. That opportunity will make all of the middle east, and the rest of the world a safer place to live.