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The Gulf War and Oil 1990: How Geopolitics Moves Markets in Hours
Iraq's invasion of Kuwait on August 2, 1990, and its immediate impact on global markets
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MarketPedia Editorial
9 min read·August 2, 2024
On August 2, 1990, Saddam Hussein's Iraq invaded Kuwait. The price of oil doubled in weeks. Global stock markets plummeted. A perfect case study on the geopolitical impact on markets.
The Invasion of Kuwait
On August 2, 1990, at 2 AM, Iraqi troops crossed the Kuwaiti border. The price of oil doubled: from approximately 17 dollars to over 40 dollars. Global stock markets plummeted by 10-20%.
Operation Desert Storm
On January 17, 1991, the coalition began the bombing campaign. Paradoxically, markets rebounded immediately — the 'buy the war' effect: when war begins, uncertainty is reduced.
Lessons
- Geopolitics moves markets in hours, not days.
- Oil remains the quintessential geopolitical asset.
- 'Buy the war, sell the peace' is a historical pattern.
# Kuwait# Iraq# Oil# 1990# Geopolitics# Gulf War