16 January 1991: Operation Desert Storm begins

Coalition forces led by the US launched an operation to liberate Kuwait from Iraqi forces on this day in 1991, sending the oil price soaring.

After the Iran-Iraq war ended in 1988, Iraq was unable to repay $14bn it had borrowed from neighbouring Kuwait to finance the war. Iraq also claimed that Kuwait's refusal to cut oil production was depressing the oil price, and that Kuwait was stealing oil from a cross-border field.

However, despite deteriorating relations between the two sides, the world was still taken by surprise when Iraq's dictator, Saddam Hussein, ordered his forces to invade Kuwait on 2 August 1990. The invasion was condemned by all major powers and the UN Security Council passed a resolution demanding the Iraqi army withdraw. On 7 August, the US began Operation Desert Shield, sending troops to protect neighbouring Saudi Arabia, which was threatened by Saddam. While diplomatic efforts to persuade Iraq to retreat continued, the US began assembling a military coalition of 39 countries to force it to exit. Meanwhile, markets worried about the effect on oil supply, with prices more than doubling to a peak of $46 per barrel in October.

On 29 November, the Security Council passed a resolution demanding a full Iraqi exit by 15 January 1991. When this deadline passed, the US president, George HW Bush, announced the start of military action (Operation Desert Storm) the following day. Several weeks of air bombardment overwhelmed Iraqi forces, and the coalition was able rapidly to take control after entering Kuwait on 24 February. The US declared a ceasefire on 28 February. Oil prices fell back to $20 per barrel. They would remain at a similar level for the rest of the 1990s, helping to boost the world economy.

Recommended

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Just how green is nuclear power?
Energy

Just how green is nuclear power?

Nuclear power is certainly very clean in terms of carbon emissions, but what about the radioactive waste produced as a byproduct? It’s not as much of …
22 Jan 2022
Inflation: now we really have something to worry about
Inflation

Inflation: now we really have something to worry about

We’ve been worrying about a sharp rise in inflation for years, says Merryn Somerset Webb – now, we finally have something to worry about.
21 Jan 2022
Amazon halts plans to ban UK Visa credit card payments
Personal finance

Amazon halts plans to ban UK Visa credit card payments

Amazon has said that it is to shelve its proposed ban on UK customers making payments with Visa credit cards.
17 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022