Nationalization of Iranian oil industry

TEHRAN, Mar. 20 (MNA) – 72 years ago, the Iranian Parliament ratified oil legislation that caused extreme worry for neocolonial powers.

Led by Prime Minister Mosaddegh and religious figures such as Ayatollah Kashani, the nationalization of Iran’s oil entered a new phase on [Iranian calendar month of] Esfand 29 (falling on March 20) after the Majlis passed the related legislation.

The movement sought to cut the hands of Britain that was exploiting Iran’s oil and giving a tiny portion back to the country. London could not tolerate such a movement for many reasons and hence set the stage for a coup against Mosaddegh two years later with the cooperation of Americans.

Western companies had been involved in the extraction of oil in Iran and other countries in the Middle East since extraction had become technically and financially feasible.

By the end of the 1940s, there was a growing resentment in Iran to the huge imbalance in oil revenues that the British government and the Iranian government were receiving from the Anglo-Iranian Oil Company (AIOC), formerly the Anglo-Persian Oil Company. Similar arrangements between the US and countries such as Saudi Arabia seemed more equitable and in 1950, Britain offered a new concession to Iraq with regard to oil revenue.

This fuelled a surge in anti-British rhetoric, with the leader of the National Front of Iran, Dr Mohammad Mosaddegh leading calls to end foreign influence in Iran and nationalizing the oil industry.

Nationalization of Iranian oil industry
Demonstrators at  Anglo-Iranian Oil Company's offices in Tehran

This call was supported by Ayatollah Kashani, a leading cleric, and Mosaddegh was made prime minister in March 1951 after the previous prime minister had been assassinated.  Mosaddegh then moved quickly and on 15 March 1951, he passed a law nationalizing IOC with immediate effect, which was verified by the Iranian parliament two days later. He gave all British employees of AIOC a week to leave the country and Ayatollah Kashani even declared a national day of 'hatred against the British government'.

Sanctions followed, and the move galvanised the British to help orchestrate the overthrow of Mosaddegh in June 1953. Nonetheless, the decision to stand up to western domination and determine its own future in such a way is seen as a key event in the history of Iran and worthy of being remembered as a national holiday.

In the first year of the nationalization, the only foreign sale of Iranian oil was 300 barrels to an Italian merchant ship. Foreign oil companies prevented any impacts of the Iranian withdrawal from being felt by consumer countries by increasing output elsewhere. Oil production was expanded by BP and ARAMCO in Saudi Arabia, Kuwait and Iraq.

Oil production in the Middle East increased by around 10% annually in 1951, 1952 and 1953. With Iranian oil production decreasing from 242 million barrels in 1950 to 10.6 million barrels in 1952, the loss of oil exports severely impacted the economy.

In August 1953, the government of Mosaddegh was overthrown by a military coup d'état orchestrated by the United States Central Intelligence Agency and the British Secret Intelligence Service. Mosaddegh was sentenced to three years in prison and then kept under house arrest until his death in 1967.

After the coup, the Iranian oil crisis ended and the AIOC did not succeed to stop production. The National Iranian oil company as an international consortium was founded and the AIOC was made a member. 


News Code 198664


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