Iran Nationalizes Its Oil Industry Summary

  • Last updated on November 10, 2022

Under Mohammad Mossadegh’s leadership, an emergent political formation called the National Front faced a crisis after nationalizing the British-owned Anglo-Iranian Oil Company. Fears that the National Front was a communist-inspired movement led the British and American governments to mount a coup that, after overthrowing Mossadegh, restored a clearly pro-Western regime.

Summary of Event

Iran was the first Middle Eastern country to grant an oil-production concession to a foreign party, the Australian William d’Arcy, in 1901. After World War I, extension of Western oil exploration in the Middle East also brought concessions to neighboring Arab states, including the new kingdoms of Iraq and Saudi Arabia. Although oil issues were important in Iran—producing in 1933 the Anglo-Iranian Oil Company Anglo-Iranian Oil Company[AngloIranian Oil Company] (AIOC) concession, which lasted until 1951—the problems of the early 1950’s stemmed from particular conditions during and after World War II. Iran;oil industry Operation Ajax Petroleum trade;Iran Nationalization of land and industries;Iran [kw]Iran Nationalizes Its Oil Industry (Mar., 1951-Aug., 1953) [kw]Oil Industry, Iran Nationalizes Its (Mar., 1951-Aug., 1953) [kw]Industry, Iran Nationalizes Its Oil (Mar., 1951-Aug., 1953) Iran;oil industry Operation Ajax Petroleum trade;Iran Nationalization of land and industries;Iran [g]Middle East;Mar., 1951-Aug., 1953: Iran Nationalizes Its Oil Industry[03450] [g]Iran;Mar., 1951-Aug., 1953: Iran Nationalizes Its Oil Industry[03450] [c]Government and politics;Mar., 1951-Aug., 1953: Iran Nationalizes Its Oil Industry[03450] [c]Manufacturing and industry;Mar., 1951-Aug., 1953: Iran Nationalizes Its Oil Industry[03450] [c]Energy;Mar., 1951-Aug., 1953: Iran Nationalizes Its Oil Industry[03450] Mossadegh, Mohammad Razmara, Ali Zahedi, Fazlollah Kashani, Ayatollah Abol-Ghasem Roosevelt, Kermit, Jr.

Following the joint Soviet and British occupation of Iran Iran;Allied occupation during World War II, World War II (1939-1945)[World War 02];Iran a serious crisis emerged, owing mainly to Soviet unwillingness to withdraw from the northern region unless Tehran offered a preferential Russian oil concession in the Caspian area. The crisis was averted only through political negotiations in the United Nations, coupled with the threat of military confrontation between the recently victorious Allies themselves.

Historians suggest that, once Soviet pressures were removed, attention in Iranian nationalist circles started to focus on the British-held AIOC concession. The nationalists’ aim was to improve Iran’s economy by negotiating higher revenues from oil resources. This goal joined other planks in the electoral platform of National Front National Front, Iranian politicians, who rallied around the leadership of Dr. Mohammad Mossadegh. At the same time, the role of a more radical, obviously communist-inspired, party—the Tudeh (Masses) Party Tudeh Party —was becoming more visible. Tudeh would initially oppose the National Front as American-supported but would shift to favor it in the middle of the coming oil crisis.

The National Front vied for support from nationalists and from voters who sought changes in traditional elitest bases of Iranian politics. Other elements supported Mossadegh more out of traditional opposition to the absolute authority of Mohammad Reza Shah Pahlavi Mohammad Reza Shah Pahlavi (r. 1941-1979) than out of devotion to the emergent position of the National Front, particularly on AIOC negotiations. This was the case for the Qashqai tribe, Qashqai tribe (Iran) whose members were eager for revenge after the shah had allegedly ordered the murder of their khan, or leader. Support also came from the mainly Turkish province of Azerbaijan, which had narrowly escaped forced occupation by the Soviets. Azerbaijan Azerbaijan was also the home province of the Ayatollah Kashani, the religious leader who played a key role in Mossadegh’s rise—and his fall. Like the Qashqais, Kashani may have been motivated by dislike of the Shah’s regime.

Such observations help explain why, when Mossadegh would stake everything on the oil nationalization issue, the unity of the National Front crumbled. The dilemma began early in 1951, when the Iranian parliament, the Majlis, Majlis pressured the cabinet to force the AIOC to grant more favorable conditions, menacing nationalization if Iranian demands (for example, fifty-fifty profit sharing) were not met. The prime minister at that time, General Ali Razmara, opposed nationalization, more on legalistic than on political grounds.

The situation declined sharply after the March 7, 1951, assassination of Razmara by a member of the terrorist movement Fadayan-e Islam (Sacrificers for Islam). The event opened the way for Mossadegh’s possible candidacy as prime minister—presumably as a spokesman for the more radical tactics regarding oil put forward by nationalists within the National Front. Then, on March 15, 1951, the Majlis passed the nationalization bill, and in April Mossadegh became prime minister.

For a time, no one knew what Great Britain might do to get Iran back to the negotiating table. A serious watershed came with the 1952 elections for the seventeenth Majlis, revealing divisions in nationalist ranks. Fewer than half of the elected members of Parliament were clearly behind Mossadegh, and by midyear more skeptical supporters fell by the wayside. Some may have sensed that Great Britain and the United States had signaled that, if a more moderate leader replaced Mossadegh, a chance to reopen negotiations might result.

One result of the growing disunity was to force Mossadegh to take measures he probably would not have considered earlier. One was rather vague: to allow the appearance that the communist-backed Tudeh (which had stopped denouncing Mossadegh midway through 1952) might be offered a greater role. Other measures suggesting Mossadegh’s willingness to use dictatorial methods worried many middle-class elements, who were hoping for more signs of democratic progress.

The evolving situation created by the oil crisis left the regime open to the danger of overthrow by a number of alienated groups. For a short time, after Mossadegh resigned after a rift with the shah, the moderate Ahmad Qavam, Qavam, Ahmad appointed to head the cabinet, appeared to have support from those who had bolted the National Front. Events would show that a more extremist leader, General Fazlollah Zahedi, was already seeking a different source of assurance, that a move by the military would not backfire. He wanted a “foreign green light” before moving against Mossadegh. Because the British did not know what to do to save the AIOC, they turned to the Americans as allies, whose opposition to all leftist ideologies included covert tactics to remove Mossadegh and others like him.

Additional fractures within Mossadegh’s camp emerged early in 1953. Key figures such as National Front secretary Hossein Maki, Maki, Hossein who felt more attention should be given to him as an “expert” on the oil issue, were apparently judged ill prepared for high leadership and were distanced from Mossadegh’s group. More important was the disaffection of Ayatollah Kashani. Although he was able to take only a few of the clerical members of the Majlis with him, the symbolic importance of Kashani’s defection was considerable. However, this defection was only the beginning of political fallings-out that would push Mossadegh in the direction of what might be seen as communist-inspired actions.

As the situation deteriorated, it became apparent that Western interests would seek a way to reverse what the Mossadegh government had done. What would take place in August of 1953 was essentially a staged coup undertaken with the covert backing of the Central Intelligence Agency Central Intelligence Agency;Iran (CIA), orchestrated by top-level figures, including CIA operative Kermit Roosevelt, Jr., grandson of President Theodore Roosevelt. It is hard to know how developed plans were for a CIA-supported coup when, on June 29, 1953, President Dwight D. Eisenhower Eisenhower, Dwight D. [p]Eisenhower, Dwight D.;and the Middle East[Middle East] wrote to Mossadegh that the United States could not help Iran out of its dilemma by raising aid levels and buying oil (even though technical aid and military assistance would be kept at previous levels). Eisenhower alluded to the need to stop further “deterioration” in a “dangerous situation.” Within a month and a half (on August 16), the right wing of the Iranian army had intervened to stop further “deterioration.”

Since the coup, labeled by the CIA Operation Ajax, Operation Ajax had been designed to follow a specific scenario, things moved rather quickly. When Mossadegh refused to comply with the shah’s demand that he resign, military forces under General Zahedi carried out the coup that led to Zahedi’s step to the prime minister’s office and a series of reversals of what Mossadegh had tried to accomplish.


Changing conditions on the global stage of petroleum production and marketing after 1945 made it inevitable that there would be demands to alter obvious imbalances in interwar concessions in several regions of the Middle East, not only Iran. Whereas regimes such as those in Saudi Arabia and the Gulf emirates were relatively unsophisticated (the latter still under British tutelage), Iran had had a series of very important experiences, both of nationalist representative upsurges (especially an early twentieth century constitutional effort that failed) and strong executive leadership under the first Pahlavi Shah, Reza Shah Pahlavi Reza Shah Pahlavi (r. 1925-1941). Iran’s view of its role as a potential leader of a post-1945 Middle East was bound to involve a search for critical, nonmilitary leverage that could effectively challenge declining Western political predominance in the region.

The petroleum industry, which was mainly a foreign private venture, seemed to offer that leverage, but the Cold War changed this, sounding alarms that penetrated high governmental circles. Iranian support for an aggressive policy toward the AIOC not only was political but also involved a belief that Iran’s economic development potential depended on rapid expansion of oil revenues that could be used by the nation’s increasingly technocratic leadership. Mossadegh’s experience dashed this hope (throughout the Middle East), at least for two more decades. Iran;oil industry Operation Ajax Petroleum trade;Iran Nationalization of land and industries;Iran

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Gasiorowski, Mark, and Malcolm Byrne, eds. Mohammad Mossadeq and the 1953 Coup in Iran. Syracuse, N.Y.: Syracuse University Press, 2004. Benefitting from extensive archives made public only after several decades, this book is probably the most detailed and objective study of the background to the 1953 coup.
  • citation-type="booksimple"

    xlink:type="simple">Keddie, Nikki R. Modern Iran: Roots and Results of Revolution. New Haven, Conn.: Yale University Press, 2003. Written by one of the most recognized scholars of twentieth century Iran, this history places the Mossadegh era in a broader perspective.
  • citation-type="booksimple"

    xlink:type="simple">Kinzer, Stephen. All the Shah’s Men: An American Coup and the Roots of Middle East Terror. New York: John Wiley & Sons, 2003. A carefully documented study condemning not only the events of the mid-1950’s but also attempts by various governments and interests to “cover up” the machinations leading to Mossadegh’s downfall.

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Categories: History