After the Iran-Iraq War of the 1980s, Iraq was extremely indebted to several Arab countries, including a $14 billion debt to Kuwait. Iraq hoped to repay its debts by raising the price of oil through OPEC oil production cuts, but instead, Kuwait increased production, lowering prices, in an attempt to leverage a better resolution of their border dispute. In addition, greatly antagonizing Iraq, Kuwait had taken advantage of the Iran-Iraq War and had begun illegal slant drilling for oil into Iraqi reserves, and had built military outposts on Iraqi soil near Kuwait. Furthermore, Iraq charged that it had performed a collective service for all Arabs by acting as a buffer against Iran and that therefore Kuwait and Saudi Arabia should negotiate or cancel Iraq’s war debts. The war with Iran had also seen the destruction of almost all of Iraq’s port facilities on the Persian Gulf cutting off Iraq’s main trade outlet. Iraq security could only be guaranteed by controlling more of the Gulf Coast, including more secure ports including Kuwait.

In August 1990, Iraqi troops crossed the Kuwaiti border with armor and infantry, occupying strategic posts throughout the country, including the Emir’s palace. Iraq detained thousands of Western visitors as hostages and later attempted to use them as bargaining chips. Hussein then installed a new Iraqi provincial governor, described as “liberation” from the Kuwaiti Emir

In January 1991 the United States Congress authorized the use of military force to drive Iraq out of Kuwait. The coalition launched a massive air campaign codenamed Operation Desert Storm, beginning early morning on January 17, 1991. On February 22, 1991, Iraq agreed to a Soviet-proposed cease-fire agreement. The agreement called for Iraq to withdraw troops to pre-invasion positions within three weeks following a total cease-fire, and called for monitoring of the cease-fire and withdrawal to be overseen by the UN Security Council. The US rejected the proposal but said that retreating Iraqi forces would not be attacked, and gave twenty-four hours for Iraq to begin withdrawing forces. On February 24, the US began Operation Desert Sabre, the ground portion of its campaign and declared that Kuwait had been liberated in next 3 days.

Reference:

http://www.historyorb.com/day/february/22?p=2

http://www.sheppardsoftware.com/Middleeastweb/factfile/Unique-facts-MiddleEast10.htm