1990 oil price shock and prices began to fall. On August 2, 1990, The Republic of Iraq invaded the State of Kuwait, leading to a 7-month occupation of Kuwait and an eventual U.S.-led military intervention. While Iraq officially claimed Kuwait was stealing its oil via slant drilling, its true motives were more complicated and less clear. At the time of the invasion, Iraq owed Kuwait $14 billion of outstanding debt that Kuwait had loaned it during the 1980–1988 Iran–Iraq War. In addition, Iraq felt Kuwait was overproducing oil, lowering prices and hurting Iraqi oil profits in a time of financial stress. In the buildup
Invasion of Kuwait Republican Guard or fell back to neighbouring Saudi Arabia and Bahrain. Iraq set up a puppet government known as the "Republic of Kuwait" to rule over Kuwait and then annexed it outright, when Saddam Hussein announced a few days later that it was the 19th province of Iraq. When the Iran–Iraq War broke out, Kuwait initially stayed neutral and also tried mediating between Iran and Iraq. In 1982, Kuwait along with other Arab states of the Persian Gulf supported Iraq in order to curb the Iranian Revolutionary government. In 1982–1983, Kuwait began sending significant financial loans to Iraq. Kuwait's large-scale