It began a difficult period for Iran in oil sales and international cooperation, coinciding with a legal war at international tribunals over the cancellation of the concession deal. Iran, under Prime Minister Mohammad Mosadeq’s government, went through two challenging years. In the summer of 1953, the Mosadeq government was toppled due to large-scale internal differences.
In the wake of the downfall of the Mosadeq government, speculation was rife that Iran would return to the age of concessions, a legacy of the 19th-century colonialism era. However, it did not occur, and the governments that came after recognized the national oil industry as an unchangeable law.
In the mid-1950s, amid growing global demand for oil, Iran was becoming ready to play a bigger role than before in the world oil market. A consortium of big oil firms, including British Petroleum, Royal Dutch Shell, Texaco, Standard Oil, and French oil company, was formed to extract and sell Iranian oil. The consortium was authorized to prospect for oil only onshore.
In the mid-1960s, Iran made a historic step towards cooperation with smaller oil companies, including Italy’s Agip, Pan American Petroleum, Murphy Union, Dutch Philipps, France’s Elf, and India’s oil company, which marked the start of offshore oil production in Iran through oil recovery in the Persian Gulf.
Iran saw its oil revenue from cooperation with the consortium and oil exports growing. Such big revenue facilitated financing infrastructure for national development for governments, although economic decision-makers made big mistakes. Iran’s oil revenue financed national modernization to a large extent. The wave of modernism and industrial development in Iran in the 1960s and 1970s took shape in light of economic prosperity achieved thanks to oil income. Iran’s significant oil revenue empowered governments to establish a modern and well-equipped army, lead the agriculture sector towards industrialization, and build thousands of kilometers of road and railway across vast Iran. It could even be argued that fateful social developments, including the development of a new social system and ownership in Iranian villages and the end of feudalism in rural areas, occurred thanks to the funneling of big oil income to the development of national infrastructure. Oil and access to oil revenue developed a new and different image of Iranian society.
On a larger scale, thanks to the significant growth in Iran’s oil production due to international cooperation, Iran has grown into a regulating factor in the global oil market, an advantage that pushed Iran towards a “new world oil market order” through contribution to the establishment of the Organization of the Petroleum Exporting Countries (OPEC) in 1960.
Iran’s status as a founding member of OPEC was a result of the nationalization of Iran’s oil industry. That, along with Iranian foreign policy backed by oil supply, painted a new image of Iran in regional and international relations. This new image was also a result of the nationalization of Iran’s petroleum industry.
In Iran’s political literature, trends leading to the nationalization of the petroleum industry are celebrated. National and popular combats that ended British dominance of Iran’s petroleum industry still hold a memory of a big victory for Iran. However, the results of the nationalization movement are often ignored, particularly because this historical development had been overshadowed after the fall of the Mossadeq government due to its close cooperation with Western governments. But the truth could not be denied. The nationalization of the petroleum industry left long-term and permanent impacts on Iranian society. They still could be reviewed. The nationalization of oil and its economic outcome made Iran much more modern than its neighbors in the region. That is why nationalization remains an identity-producing factor: devotion to an event that marked the start of a new period for Iran.
Reza Vosouqi
Journalist
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