BRITAIN NO LONGER A WORLD POWER TO ACT ALONE: THE NATIONALISATION OF THE ANGLO-IRANIAN OIL COMPANY’S CRISIS: AN EXAMPLE BRITAIN SHOULD HAVE LEARNT IN THE SUEZ CANAL CRISIS OF 1956

BRITAIN NO LONGER A WORLD POWER TO ACT ALONE: THE NATIONALISATION OF THE ANGLO-IRANIAN OIL COMPANY’S CRISIS: AN EXAMPLE BRITAIN SHOULD HAVE LEARNT IN THE SUEZ CANAL CRISIS OF 1956

In the United Kingdom, at the request of the Ministry of Fuel and Power, an Oil Supply Advisory Committee in June 1951 was formed. Sir William Fraser of the Anglo-Iranian Oil Company became its chairman. Other members were representatives of Trinidad Leaseholds and Shell Group.

 

Similar action took place in the United States. The Foreign Petroleum Supply Committee was formed in June 1951. The Chairman of this committee was the Secretary of the Interior and Petroleum Administrator for Defence, Oscar L. Chapman, and worked in close co-operation with its British Counterpart. This organisation comprised 19 companies, five of which were the five major cartel firms, such as Texas and Gulf, New Jersey Standard, California Standard, Socony-Vacuum and a number of their associates and subsidiaries. The Sinclair Oil Company, and the new group in the Middle East, the American Independent Oil Company, Pacific Western Oil Corporation, and Superior Oil Company.On 2nd August 1951, the drafting of a joint plan of action to meet the shortage of oil as a result of shutting down of Iranian oil began, by the British and American committees. Within a few weeks, in accordance with the plan adopted by the two countries’ committees, production in Venezuela, Saudi Arabia, Kuwait and Canada was increased by a monthly total of 2,000,000 tons.During the first half of 1952, Middle East oil production rose by 15,000,000 tons, thus exactly replacing the lost output from Iran.

Total Middle East production rose from 97,100,000 tons in 1951, to 106,100,000 in 1952, one sixth of the world’s output and second only to the 300,000,000 tons of the United States.¹

The Deputy Petroleum Administrator and President of the Standard Oil Company of Indians, Bruce Brown, reported that of the daily loss of 660,000 barrels, 500,000 had already been made up from American and British sources. According to him,

200,000 barrels a day, normally shipped from the Middle East to the United States, had been diverted to Europe, and production in Texas and Louisiana stepped up accordingly.²

 

Though there was disruption in its trading patterns and efforts had to be made to rectify matters, the Anglo-Iranian Oil Company, for its part, was not financially hit, from the denial to it of its largest oil fields and its principal refinery, since it had plenty of other available sources of crude. ‘Kuwait production was dramatically stepped up to take its place.’³

 

Additional liftings were made from Iraq, and production in Qatar was stepped up rapidly; Kuwaiti oil proved to be particularly plentiful and even cheaper to produce than Iranian oil, being so located and under such natural pressure as to flow through quite short pipelines to tankers without the need for pumping

The establishment of the two British and American committees or the Joint Plan of Action, besides what has been said, secured schemes for the purchasing, loan, sale or exchange of crude oil, petroleum products and blending agents for distribution in foreign countries, among the participating companies. It provided arrangements for the most efficient use, without regard to ownership of terminal and strong facilities, tankers, pipelines, and other transportation facilities to minimise duplications, multiple loadings, and dischargings, split cargoes, cross hauling and back hauling, and idle time in port.

 

As Iranian oil production was being disrupted, therefore shortage of fuel had to be made up. Also the Korean War was still going on and shortage of fuel would have important strategic implications. Additionally, Britain’s role in the defence of the West was important and alternative supplies of oil from here had to be found, even though the US disagreed with British policy in the Iranian crisis.

      1.  Ibid.S.STRANGE, Sterling and British Policy, (London: Oxford University Press, 1971), p. 107.

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