Transcript Document

Center of Gravity
1944
DeGolyer:
“The center of gravity of world oil production
is shifting to the Middle East”
What to do
In the Middle East?
• The US government to acquire direct ownership
• The US government to negotiate an agreement with the British
• Let the private companies do the business
Yalta
1st option: ruled out
2nd option: before going to Yalta, Roosevelt withdrew it
from Senate
3rd option: won
Growing demand and
rising production
1945: 26 million cars
1950: 40 million cars
USA
1948
Net exporter
Many new discoveries
Net importer
March 12, 1947
Truman 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
Europe in crisis
Marshall plan
Birth of Israel
May 14, 1948
First Arab-Israeli war
King Ibn Saud
h
Dilemma of Ibn Saud:
Birth of Israel
US guarantee on Saudi Arabia’s independence
Soviet threat
Advancement in
Technology
Post-war petroleum order
Center: Middle East
Market: USA, Western Europe, Japan
Technology: huge development
Problem: Large surplus of oil
How to divide profit
50-50 Deal, December 1950
The producing countries wanted more money and power
Korean War
Iran
40 % of Middle Eastern oil
Weak shah
US interest
Korean war
British hatred
Nationalization, May 1951, Mossadegh (Mossy)
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 coup
The 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
Suez
Suez represented the post-war petroleum order:
2/3 of Europe’s oil passed through Suez
2/3 of traffic in Suez was oil
Nasser
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
Aswan
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
2nd Arab Israeli War
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
1948
1972
World oil production
8.7 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%
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
OPEC
End of 1950s: Soviet Union is the second largest oil producer
Oil companies cut prices
OPEC’s aim:
Building national refineries
National integrated oil companies
Stabilize market for themselves, 60-40 % share
Six Day War
1960s: more discoveries in Africa, large oil surplus
Nasser’s 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
Oil embargo against Israel’s friends
Arab oil decreased by 60%
No effect – oil is abundant, cheap
Embargo lifted in September
Nixon
End of 1960s, early 1970s
Recession in US and British power
Vietnam war
Anti-Americanism becomes a great fashion
Nixon-doctrine
1971: collapse of Bretton Woods
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
Qaddafi
Occidental Petroleum discovered oil in Libya in 1966
Qaddafi coup, 1969
Increase in oil price
All the countries increased their profit share
Sadat
Yom Kippur War
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
Wategate
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
Boom times
Alska, Mexico discoveries
North Sea: the biggest play of all
Komeini
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 industry
By December 1978 no oil exports from Iran
The Shah escaped
February 1, Komeini returned to Tehran
Carter
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
Hostage
November 4, 1979 : hostage
USA allowed the Shah for treatment
The West, especially USA seemed very weak
Soviets invaded Afghanistan
Price: $45
Hussein of
Iraq
September 22, 1980: Iraq attacks Iran
Early 80’s:
Two drastic changes: Enormous investment in exploration
Decreasing demand
Result: oil surplus
June 1982: Lebanon war
Golden age for oil geologists
Cheap oil: financial crisis in some oil exporters
Mukluk 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
Desert Storm
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