Global Policy Forum

Oil and Economic Interests in Iran


Source: US Central Intelligence Agency

The British government long ruled Iranian oil through the UK-owned Anglo-Persian Oil Company that began operations in 1908. British disregard for Iranian interests and London's staunch refusal to negotiate changes in the oil concession, led to a rising nationalist opposition. When Mohammed Mossadegh, a respected elder statesman, become prime minister in 1951, he finally succeeded in nationalizing Iran's oil industry, but Britain demanded a reversal, cutting off Iran's foreign oil sales. As British power waned, the CIA staged a coup in 1953 to oust Mossadegh and install in power the authoritarian, pro-US shah, Reza Pahlavi. Soon thereafter, US companies took a large share of the oil concession and Washington replaced Britain as the most influential foreign power. For 25 years, Iran served as a key US ally in the Middle East region, buying expensive US military hardware. But a mass-based revolution finally overthrew the Shah in 1979, leading to a new Islamic government. When student militants in Tehran seized hostages at the US Embassy that year, Washington cut off diplomatic and economic relations with Iran, imposing comprehensive sanctions. US oil companies have not been able to return to the country since then, but European and Asian companies have large and growing operations in Iran, especially in the oil and gas sector, leading to new and potentially explosive international rivalries.


Articles and Documents

2007 | 2006 | 2005 | 2004 | 2003 | 2001




More Imperialist Excesses? (October 25, 2007)
Russia's President Vladimir Putin met with heads of states from Kazakhstan, Azerbaijan, Turkmenistan and Iran to discuss the future of the Caspian Sea area – one of the most oil-rich regions in the world. The leaders strongly condemned any outside aggression or interference in the area, signaling to the US not to expect cooperation from these countries, should the Bush administration launch an attack on Iran. (Granma International)

Iran Leads Attack against US Dollar (April 12, 2007)
This Global Research article reports that Iran is "waging economic war" against the US by ending all oil sales in US dollars. The shift to the euro and other currencies could encourage large holders of dollars – such as China, which buys more than 10 percent of its crude oil from Iran – to diversify their foreign exchange reserve portfolios. Because these holdings "are vital to financing the continuing US federal budget deficits," the move to non-dollar currencies seriously threatens US economic stability.

A Predator Becomes More Dangerous When Wounded (March 9, 2007)
This Guardian article discusses the tensions between Washington and Tehran and claims that hostilities exist because of Iran's unwillingness to subordinate itself to the US. The author Noam Chomsky argues that the Bush administration desperately wants to gain effective control of the invaluable energy resources in the Middle East and that access to oil resources alone is not enough.




Next We Take Tehran (July/August 2006)
This Mother Jones article gives an overview of US diplomatic and military actions in the Persian Gulf from the 1950s through the 1990s. The author argues that the US aimed to block Russia and China from a Middle Eastern energy supply, thus blocking the two powers' aspirations for greater international influence. US-Iran tensions have a similar empirical agenda.

The Race for Iran (June 20, 2006)
This New York Times editorial proposes that behind the talks on Iran's nuclear ambitions, lies a "broader strategic competition" over Iran's vast oil and gas reserves. The author argues that China and Russia seek control over Iran's natural resources in an effort to counter US dominance in the region.

In The Heart of Pipelineistan (March 17, 2006)
This Asia Times article puts the tensions between Iran and the US over Iran's alleged nuclear program in a broader geopolitical context. Iran and the US are not the only players in the region best termed "Pipelineistan." China, India, Russia and Pakistan try to increase their influence in the region, because of its vast fossil fuel reserves.

Will Fight for Oil (February 24, 2006)
This New York Times article argues that keeping oil flowing out of the Persian Gulf has constituted a cornerstone of US foreign policy for more than half a century. The US regards any attempt to gain control of this region as an assault on its vital interests, which Washington will repel by any means necessary, including military force. The securing of oil constituted one of the reasons to invade Iraq.

WWIII or Bust: Implications of a US Attack on Iran (February 18, 2006)
This article argues that the US actively seeks confrontation with Iran, using the alleged Iranian nuclear threat as a pretext. The real reasons are economic - the US wants to secure the vast fossil energy reserves. The US also seeks to safeguard the dollar as Iran plans to allow oil trading in euros in March 2006. (Common Dreams)

Iran Sanctions Could Drive Oil Past $100 (January 22, 2006)
If the Security Council sanctions Iran over its nuclear program, Tehran may retaliate by curbing its oil exports, possibly causing oil prices to soar past $100 a barrel. Some experts fear that a sharp global economic slowdown could follow. Others, however, argue that Iran's "economic blackmail" would hurt Tehran more than it would hurt the world economy, as the US and other members of the International Energy Agency could compensate with their own oil reserves as well as with crude from Saudi Arabia and Russia. (Associated Press)




Iran's Oil Gambit - and Potential Affront to the US (August 30, 2005)
The Iranian government has announced plans to set up an international oil trading exchange that would trade petroleum products in euros instead of US dollars. This could potentially undermine the standing of the US dollar, but experts doubt that trading business will shift from London and New York to Tehran any time soon. The Iranian government has also struck important oil and gas deals with India and China, winning allies to the East as it faces nuclear criticism from the West. These moves signify Iran's effort to "stay on the offensive," the author argues, as pressure from Washington mounts. (Christian Science Monitor)

Oil Puts Iran Out of Reach (August 16, 2005)
Iran, OPEC's second largest oil producer, uses its influence on the world's economy to forestall the US and EU efforts to bring Tehran's nuclear program to the Security Council agenda. As eager customers for Iran's oil and gas, energy hungry powers such as Russia, Japan, China and India have vested interests in not seeing the nuclear issue escalate, via the Security Council, into an oil crisis. This, in turn, makes the prospect of UN sanctions very unlikely. (Baltimore Sun)

The Iraq War Is Over, and the Winner Is... Iran (July 21, 2005)
Professor Juan Cole points out that ironically, Iran may have benefited from the Iraq War more than any other state, including the US. His analysis comes in the wake of Iraqi Prime Minister Ibrahim al-Jaafari's trip to Iran in July. In the meetings, the leaders of Iraq and Iran discussed oil pipelines, trade and financial aid, and they talked about possible military cooperation along their common borders. Warming relations between the two countries could enhance Iran's geopolitical standing, a prospect which worries the US and Iraqi Sunnis, says Cole. (Salon)

Oil, Geopolitics, and the Coming War with Iran (April 11, 2005)
Iran's vast oil and gas reserves will play a large factor in the "world's future energy equation" and dictate the Bush administration's Iran policy, says author Michael Klare. Competitors China, India and Japan have all tapped into Iranian resources, but US firms still do not have access. While the US government may have evidence to support their claims over Iran's nuclear capabilities, Klare warns that Washington used such an excuse in Iraq. These geopolitical oil concerns, he says, will likely make Iran the next target for the US. (TomDispatch)

A Game As Old As Empire (February 16, 2005)
In an AlterNet interview, economist John Perkins declares that Washington's perpetual desire to control oil resources led the US to intervene in Iran, Saudi Arabia and Iraq, and also caused the 9/11 attacks. Pointing out that several US corporations beat out countries on the world's largest economies list, Perkins laments that Washington has gone against the principles of democracy by overtaking foreign oil industries. "Oil is a curse to the world," he says, yet too few US citizens understand how or why.

The Axis of Oil (January 31, 2005)
Access to cheap oil has often dominated and given leverage to US international policy. But as Washington's attention remains focused on the Middle East and the Iraq insurgency, India and China have crept up on traditional US oil strongholds worldwide. This In These Times article warns of an inevitable "clash" as China and India let their energy needs dictate ties with Russia as well as Iran and other countries with strained US relations.




The Real Reasons Why Iran Is the Next Target: The Emerging Euro-Denominated International Oil Marker (October 27, 2004)
According to the Center for Research on Globalization, the US stance towards Iran is as much about economics as it is about nuclear proliferation. Iran is planning a new commodity exchange for Middle Eastern and OPEC oil where trades will take place only in euros. If the exchange is a success, US dollar hegemony could potentially come under pressure, as oil sales have traditionally been conducted in dollars. The article argues that US policy towards Iraq was driven by similar concerns, since Iraq had shifted its oil sales to euro-denomination in 2000. After the US invasion, Washington quickly returned oil sales to dollars, removing Saddam's threat to the strength of the greenback.




The Oily Americans (May 19, 2003)
This Time article "illustrates the dark side of American oil policy" through the history of US covert action and foreign aid in Iran, and the fight against communism in the Middle East. Access to Iranian oil "came with a stiff price," as the US-supported Shah created "the first American-hating Islamic Republic," and Ayatollah Khomeini ended US-Iranian oil relations after his rise to power in 1979. These authors believe the US government's handling of oil issues has caused the US public to rely on "foreign intervention rather than domestic conservation."




Cheney Panel Seeks Review Of Sanctions (April 19, 2001)
The US is revising its sanction regime not only on Iraq, but also on Iran and Libya in order to meet energy needs in the country. (Washington Post)



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