This report provides a brief overview on the current political state of Kuwait, which has been pivotal to nearly two decades of U.S. involvement in Iraq and the Middle East. This report also discusses relations between Kuwait and the U.S., and the continuing domestic unrest in Kuwait, an issue separate from the unrest currently sweeping the rest of the Middle East.

Deficient productive capacity has not yet caused an oil crisis, but that does not mean it never will. Significant increases in world oil demand will have to be met primarily from Persian Gulf supplies. This is a region with a history of wars, illegal occupations, soups, revolutions, sabotage, terrorism, and oil embargoes. To these possibilities may be added growing Islamist movements with various antipathies to the West. If oil production were constrained, oil prices could rise abruptly along with adverse world economic repercussions. If the IEA and EIA are correct on the demand side, deficient world oil productive capacity could cause an oil crisis within 15 years and political disruptions in Saudi Arabia could cause one sooner. However, if the increases in world oil demand were more moderate, and there is long-term relative peace in the Middle East, with increasing foreign participation in upstream oil activities, a business as usual world oil demand and supply situation would be a likely scenario for much of the next century.

With the conventional military threat from Saddam Hussein’s Iraq removed, Kuwait has begun breaking the longstanding political deadlock over leadership and political and economic reform. However, Kuwaiti leaders are facing a new set of concerns posed by continuing instability in Iraq. This report will be updated as developments warrant. See also CRS Report RL31533, The Persian Gulf States: Postwar Issues for U.S. Policy, 2004.