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.

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Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri