The Abadan Crisis
occurred from 1951 to 1954, after Iran nationalized
the Iranian assets of the Anglo-Iranian Oil Company
(AIOC) and expelled Western companies from oil refineries in the city of Abadan
(see Abadan Refinery
The AIOC was nationalized by the Iranian Parliament in March 1951. In Iran this was enormously popular and seen as a long overdue staunching of its national wealth which could now be harnessed fighting poverty in Iran. In Britain the nationalization was widely seen as an intolerable breach of contract, or theft. British emissaries in the United States after the nationalization argued that allowing Iran to nationalize the oil company `would be widely regarded as a victory for the Russians` and would also `cause a loss of one hundred million pounds per annum in the United Kingdom's balance of payments, thus seriously affecting our rearmament program and our cost of living.`"
British warships blockaded Abadan. On August 22 British cabinet imposes a series of economic sanctions on Iran. It prohibited exports of key British commodities, including sugar and steel, directed the withdrawal of all British personnel from Iranian oil fields and all but a hard core of about 300 administrators from Abadan, and blocked Iran's access to its hard currency accounts in British banks.
In July 1952 its ships intercept the Italian tanker Rose Mary and forced it into the British protectorate of Aden on the grounds that the ship's oil was stolen property. News that the Royal Navy was intercepting tankers carrying Iranian oil scared off other tankers and effectively shut down oil exports from Iran.
The crisis was brought close to outright war with Iran, howeverwho retained an ally in the United States, hoping Iran would continue as a bulwark against communism. U.S. President Dwight D. Eisenhower reversed this stance in 1953.
As a result of the crisis, Iranian Prime Minister Mohammed Mossadegh
was ousted from power. During the coup
, codenamed Operation Ajax
, the CIA
and the MI6
restored Mohammad Reza Pahlavi
to power. In August 1954, the company was set under the control of an international consortium
. Initially, ownership shares in the Consortium proposed to be divided along the following lines: 40% to be divided equally (8% each) among the five major American companies; British Petroleum
to have a 40% share; Royal Dutch/Shell
to have 14%; and CFP
, a French Company, to receive 6%. But American independent oil companies had been interested in beginning operations in Iran for some time and had only done so while the Iranian/AIOC dispute continued. When it became known that independent companies were to be excluded from the consortium, these companies manifested their anger. In response to these complaints, Hoover persuaded the major shareholders to relinquish 5% (or 1% each) of their shares in the consortium to be made available to American independent companies.