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DeGolyer:
The center of gravity of world oil production
is shifting to the Middle East
1944
Center of GravityCenter of Gravity
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The US government to acquire direct ownership
The US government to negotiate an agreement with the British
Let the private companies do the business
What to doWhat to do
In the Middle East?In the Middle East?
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1st option: ruled out
2nd option: before going to Yalta, Roosevelt withdrew it
from Senate
3rd option: won
YaltaYalta
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Growing demand andGrowing demand and
rising productionrising production
1945: 26 million cars
1950: 40 million cars
1948
Net exporter Net importer
USA
Many new discoveries
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March 12, 1947March 12, 1947
Truman DoctrineTruman Doctrine
1. New Aramco: Socol, Standard Oil of NJ, Texaco, Socony
2. Gulf Oil Shell in Kuwait
3. Iranian contract between Anglo Iranian and Standard Oil,Socony
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Europe in crisisEurope in crisis
Marshall planMarshall plan
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Birth of IsraelBirth of Israel
May 14, 1948
First Arab-Israeli war
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Dilemma of Ibn Saud:
Birth of Israel
US guarantee on Saudi Arabias independence
Soviet threat
King Ibn SaudKing Ibn Saud
h
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Post-war petroleum order
Center: Middle East
Market: USA, Western Europe, Japan
Technology: huge development
Problem: Large surplus of oil
How to divide profit
Advancement inAdvancement in
TechnologyTechnology
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50-50 Deal, December 1950
The producing countries wanted more money and power
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Iran40 % of Middle Eastern oil
Weak shah
US interest
Korean warBritish hatred
Nationalization, May 1951, Mossadegh (Mossy)
Korean WarKorean War
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Expropriation vs. economic warfare, 1952
No oil export no money, economic trouble
Law and order collapsing
Mossadegh turned to Moscow
U.S. and Brithish assisted coupThe shah regained power
Oil consortium: Jersey, Socony, Texaco, Standard of California,
Gulf; Shell; CFP; Anglo Iranian
Result: The USA is the major player in the Middle East, 1954
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Suez represented the post-war petroleum order:
2/3 of Europes oil passed through Suez
2/3 of traffic in Suez was oil
SuezSuez
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1952: a coup removed the king
1954: Colonel Gamal Abdel Nasser became dictator
Rejection of the West
Pan-Arabism
greatest international crime the creation of Israel
Got weapons from the Soviet block
NasserNasser
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Whether to build the Aswan dam?
US rejected
Revenge: expropriation of Suez Canal, July 26, 1956
Eisenhower did not want war
The French and British wanted military action
AswanAswan
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War plot against Egypt: France, UK, Israel
October 29, 1956
Eisenhower was furious
Soviet Union threatened by rocket attacks
Revolution in Hungary
Result: Nasser became a hero and leader of Arabs
22ndnd
Arab Israeli WarArab Israeli War
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World oil production8.7 million barrels 42 million barrels
Middle East
1.1 million barrels 18.2 million barrels
U.S. production share
64% 22%
U.S. reserves share
34% 7%
1948 1972
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50-50% is not enough any more
Nasser ascendant
Soviets build Aswan
Syria joins Egypt: United Arab Republic
Nasser controls oil: Suez and pipelines
Producer countries wanted more money and power
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End of 1950s: Soviet Union is the second largest oil producer
Oil companies cut prices
Building national refineries
National integrated oil companies
Stabilize market for themselves, 60-40 % share
OPECOPEC
OPECs aim:
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1960s: more discoveries in Africa, large oil surplus
Nassers prestige was declining
He wanted to gain recognition: liquidation of Israel
Blockade against Israeli shipping,Military buildup with Syria, Jordan, Iraq
June 5, 1967: 3rd Arab-Israeli war, 6 day war
Occupation of Sinai, Gaza, West Bank, East Jerusalem
Six Day WarSix Day War
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Oil embargo against Israels friends
Arab oil decreased by 60%No effect oil is abundant, cheap
Embargo lifted in September
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End of 1960s, early 1970s
Recession in US and British power
Vietnam war
Anti-Americanism becomes a great fashion
Nixon-doctrine
Demand in oil was catching up with supply end of surplus
Huge economic growth fueled by oil
US oil production: 11.3 million barrels per day, the peak
More dependency on Middle Eastern oil
NixonNixon
1971: collapse of Bretton Woods
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Occidental Petroleum discovered oil in Libya in 1966
Qaddafi coup, 1969
Increase in oil price
All the countries increased their profit share
QaddafiQaddafi
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Egypt was in bankrupt after Nasserism ended
Sadat wanted to restore order and make peace with Israel
Israel was conceited after the 1967 success
1973 Yom Kippur war
SadatSadat
Yom Kippur War
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The Soviet Union supported Egypt and Syria
The USA supported Israel
World War conflict was imminent
Oil exporters increased oil prices 100%Arabs cut oil supply and eventually stopped exporting to USA
A weak president in the Watergate agony contributed to the
oil crisis
WategateWategate
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Boom times
Alska, Mexico discoveries
North Sea: the biggest play of all
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Iran: too much money corruption, chaos, political tensions
Shah represented modernization
Shiite fundamentalists hated US as the main ally of the Shah
Escalating chaos in the oil industryBy December 1978 no oil exports from Iran
The Shah escaped
February 1, Komeini returned to Tehran
KomeiniKomeini
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Second Shock
Panic in the world market: price went up from $13 to $34
From March 1979, Iranian export started to come back
Shortage in oil: long lines at gas stations
Peace accord: Camp David
CarterCarter
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November 4, 1979 : hostage
USA allowed the Shah for treatment
The West, especially USA seemed very weak
Soviets invaded Afghanistan
Price: $45
HostageHostage
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Hussein ofHussein of
IraqIraq
September 22, 1980: Iraq attacks Iran
Early 80s:
Two drastic changes: Enormous investment in exploration
Decreasing demand
Result: oil surplus
June 1982: Lebanon war
Golden age for oil geologists
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Cheap oil: financial crisis in some oil exportersMukluk dry hole: end of exploration boom
End of pessimism of the 70s
Economy is booming, but not because of oil fuel
Oil is not that dangerous as before
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August 2, 1990: Iraqi invasion of Kuwait
New oil shock, supply decreased
Loss had been compensated by December from other sources
January 17, 1991: Desert Storm
February 28 cease fire
Desert StormDesert Storm