Abadan Crisis

The Abadan Crisis was a major international conflict from 1951 to 1954. It centered on the control of oil in Iran. At the heart of the struggle was the Anglo-Iranian Oil Company, known as the AIOC. This company was controlled by the United Kingdom. For the British, the AIOC was a massive overseas asset. It was also a major source of national pride for the British government.

The crisis began because of a disagreement over ownership. Iranian Premier Mohammad Mosaddegh believed the AIOC's presence was wrong. He argued that the 1933 concession granted to the company was illegal and immoral. He wanted to challenge the British commercial presence in his country. In March 1951, the Iranian Parliament voted to nationalize the oil. Nationalization means a government takes control of its own natural resources. This move was very popular among the Iranian people. They hoped to use oil wealth to fight poverty across the nation.

Britain viewed nationalization as a breach of contract or even theft. British officials feared that if Iran succeeded, other nations might also cancel their contracts with Britain. They also worried about the cost to their own economy. British emissaries argued that the loss of oil revenue would hurt their rearmament programs. They estimated a loss of one hundred million pounds per year. This loss would affect the British cost of living. To fight Iran's control, the British cabinet imposed economic sanctions on August 22, 1951.

These sanctions were designed to pressure the Iranian government. Britain stopped exporting goods like steel and sugar to Iran. They also withdrew almost all British personnel from the Iranian oil fields. Only a small group of about 300 administrators remained in the city of Abadan. After the British workers left in late 1951, Iran tried to run the industry alone. They hoped to hire technicians from other countries or train their own people. However, most industrialized nations refused to help. Countries like Sweden, Belgium, and West Germany declined to provide technicians. Only Italy agreed to assist the Iranian industry.

The conflict eventually moved to the sea. The British Royal Navy began intercepting tankers to stop Iranian oil exports. In July 1952, the Navy stopped an Italian tanker named the Rose Mary. They forced the ship into the British protectorate of Aden. The British claimed the petroleum on the ship was stolen property. This action scared other shipping companies. It effectively shut down Iran's ability to export its oil to the world. Without these sales, the country could not access hard currency in British banks.

A major political shift occurred on August 19, 1953. This was a coup d'état, which is a sudden, often violent, change in government. The United Kingdom and the United States orchestrated this event. The mission was given the code name Operation Ajax. During this operation, the CIA and MI6 worked to overthrow Prime Minister Mosaddegh. They restored Mohammad Reza Pahlavi, the Shah, to power.

This changed the leadership and the direction of the country.

By August 1954, the management of the oil changed again. An international consortium was formed to control the AIOC assets. This group was made up of several different companies. British Petroleum, or BP, was given a 40% share. Shell held 14% of the ownership. A group of five major American companies shared 40% equally. The French company CFP held the remaining 6%. Under this new system, Iran received 25% of the profits. This was a small increase from the 20% they received under the original treaty. At the same time, other countries like Saudi Arabia received up to 50% of their oil profits through cooperation with American companies.