It was looking like Sadaam was going to be able to take control of the Straits of Hormuz, through which up to 19 million barrels of oil pass daily. Had he achieved this, Sadaam could have disrupted world oil supplies. Greenspan says that if Sadaam were able to disrupt as little as 3 million barrels a day, he could have caused prices to jump dramatically - easily to $120/barrel. If he had disrupted more than that, he could have caused chaos in the global economy.
Is this true? If it is, then history might judge that Bush did the right thing to unseat Sadaam. (I'm not saying that he was justified in invading and occupying the country - there is no justification for killing 650,000 people and turning 4 million into refugees.)
I have some doubts about Greenspan's argument.
Greenspan isn't explicitly trying to explain Bush's motivation: he is explaining his own reasons for thinking that something had to be done about Sadaam. If Bush's rationale for war had anything to do with the Straits of Hormuz, then he surely would have used it, given his kitchen-sink approach to justifying his war (WMD, human rights, regional stability, terrorism, al Quaeda, ...)
Also, Greenspan should be more explicit that such a move on Sadaam's part would cause short-term problems, not long-term ones, because if he had taken over the Straits of Hormuz there would have been a broad-based coalition of countries, including all oil-producing states whose oil business was disrupted, ready to take immediate military action to take back the Straits. In fact, had Sadaam been left in place to make such a bold move, it would probably have been fairly easy to depose him without bombing and occupying the entire country.
Update: Gwynne Dyer rebuts Greenspan here.