1
general::
In imminent danger, in an explosive situation, as in Our office is sitting on a powder keg while management decides whether or not to close us down. This metaphoric term alludes to sitting on a keg of gunpowder that could go off at any moment. [First half of 1900s]
American Heritage Idioms
2
general::
Phrase(s): sitting on a powder keg
Fig. in a risky or explosive situation; in a situation where something serious or dangerous may happen at any time. (A powder keg is a keg of gunpowder.) • Things are very tense at work. The whole office is sitting on a powder keg. • The fire at the oil field seems to be under control for now, but all the workers there are sitting on a powder keg.
McGrawhill's American Idioms And Phrasal Verbs