Stated reason 1: Iraq claimed Kuwait as their 19th province.

Stated reason 2: There is a large oil field in southern Iraq called Rumailah, the southernmost end of which extends into Kuwaiti territory. Iraq claimed that Kuwait was cheating on the allocation by using a technique known as slant drilling.

Stated reason 3: On July 17, 1990, Saddam Hussein accused Kuwait and the UAE of flooding the market with oil and lowering the per barrel price. He also took the unprecedented step of verbally threatening them, while amassing troops along the southern border.

Other factors:

Iraq assumed a lot of debt while prosecuting the 8-year war against Iran. Kuwait funded much of it. Baghdad in July 1990 requested debt relief, in light of rock bottom oil prices.

Per Norman Schwarzkopf's memoirs, CENTCOM had merely expected Iraq to take control of the whole of Rumailah Oil field and perhaps Bubiyan island. They were surprised that he took the whole country.