Germany's dependence on oil before the First World War
Before World War I, Germany's main oil supplier was the American company Standard, which supplied 90 percent of Germany's oil needs. Its own oil production in Alsace was less than 50,000 tonnes a year and the Cella oil field near Hannover produced 35,000 tonnes a year.
The battle for oil in Mesopotamia
To meet the growing demand, the German Crude Oil Corporation started exploring for fuel substitutes from the vast brown coal deposits. The corporation and Deutsche Bank were interested in exploring the rich oil resources of the Mesopotamian area, as Germany wanted to get its hands on the rich Mesopotamian oil resources before the First World War. Unsuccessful attempts also indirectly contributed to the outbreak of the First World War. At the outset of the war, Germany was aware that its reserves would not be sufficient to supply its army in the long term. It therefore planned to seize the most important British-owned oil deposits in Iran with Turkish help. One of the strategic targets was Abadan, where the British oil refineries were located. During the operations, British intelligence discovered the German plans and sent reinforcements to Abadan, and defeated the German-Turkish military grouping along the Tigris River.
In August 1916 Romania also switched to the Entente side. Germany then decided to take back the Romanian oil fields. The German military plan was to take the oil fields in Romania and Persia, but this was rendered pointless by the destruction of the oil wells. On the western fronts, the latest technical equipment was already in the armoury of the armies. Gasoline-powered tanks, transport vehicles and aircraft were used in the operation. By June 1917, for example, the British Army had 300-400 tanks. In a technical development, the Germans installed machine guns on board their aircraft.
In November 1917, the Western Front faced collapse due to lack of fuel. Fuel supplies were limited to ten days and troops' combat vehicles were left on the battlefield. The Allied blockade led Germany to appeal to US President Wilson for help. Aid arrived in oil tankers in March 1918, allowing the Entente to launch a decisive attack on the fuel-starved Germans on 18 July. After the defeat, the Germans tried to cripple the Anglo-Persian Oil Company with various acts of sabotage. With the help of their planted agents, they blew up the pipeline near Azhav and seized the oil fields of Galicia.
As a result of the war, Germany lost its main suppliers, the USA, Mexico and Russia, leaving only Austria, Hungary and Romania as suppliers, who were unable to meet its increased demand. After the peace treaty and the San Remo Conference of 1920, the Anglo-American-German-French group in Mesopotamia was granted a 25 per cent concession. The German market was then dominated by the Standard company.
The First World War ended in October 1918, and an armistice was signed in Compiègne on 11 November. The Allies won the war, not least because the United States made its oil reserves available to the Allies.
After the war, the British, Dutch and French divided Mesopotamia between themselves. In the new situation, Standard Oil, the largest American oil company, immediately changed its production policy, which led to an acceleration of the unfolding power struggle between Britain and the United States. The struggle for world domination between the two powers began. None of this would have happened if the United States had not developed into a great power that threatened Britain's traditional commercial and maritime hegemony.
The First World War, in terms of victory, was closely linked to oil.
The role of oil in the First World War
By 1917, the leadership of the armies involved in the war had provided gasoline-powered transport for troops, troop carriers, ships and aircraft.
The strategic importance of oil-rich regions, especially the oil fields of the Middle East, for the global balance of military power has been highlighted. Oil has become an important area and target in the struggle for military supremacy.
After the peace treaty, the largest oil-producing areas were North America, the Mediterranean basin, the Sunda Islands and the Soviet Union (Russia).
23 countries had oil fields, and between 1895 and 1935 the world produced a total of 18 billion barrels of oil, of which the United States produced 12 billion barrels. The largest oil-producing countries were the United States, Venezuela, Soviet Russia, Mexico, Persia, Romania and Colombia. These countries accounted for 97 per cent of world oil production.
The division of the Middle East and the clash of oil interests
At the beginning of 1916, two years before the defeat of the Germans and Turks in the Middle East, the British, the French and Tsarist Russia signed the so-called Sykes-Picot Agreement, which divided the region between the Allies. Under the terms of the treaty, the former Arab provinces of the Ottoman Empire were made British and French mandated territories. Mesopotamia (with Baghdad), and even most of Arabia, was declared a British sphere of interest. European-style governments were set up in the region. But what worked in Europe did not work in Iraq, and so there was a succession of demonstrations on the streets of Baghdad. Every year and a half, new governments were formed, political parties formed into cliques, and the Sunni elite took turns in government.
The British founded Palestine, the ports of Haifa and Acre, and became a British interest. France got Syria, Armenia Minor, Kurdistan, most of eastern Arabia with Mosul. The western Black Sea coast was given to Tsarist Russia, except for the area covered by the Treaty of Constantinople and the Dardanelles. The ideas were finalized, without Russia, by a treaty concluded at San Remo. During this period, England held part of the world's crude oil reserves. The United States produced two-thirds of the world's crude oil and met 58 percent of oil demand. In the struggle to win oil interests, the duel between Britain and the United States is significant because the two economic superpowers were fighting for world oil supremacy. The new co-owners, who called themselves the Brotherhood of Oil Merchants, were soon up in arms about the split. Gulf meanwhile acquired an option on the Bahrain Islands (1927), off the Saudi coast, despite the monopoly of the other Brotherhood members claiming that Bahrain was also within the red line. The Gulf at that time Bahrain had never been part of the Turkish Empire and Persia had always laid claim to the area. In 1928, under pressure from the Gulf, the Bahraini option was played into the hands of the Standard of California (Social), because the Social was not part of the Commonwealth and was therefore not subject to the provisions of the Convention. The British resigned themselves to losing the Bahrain Islands because geologists had found no oil there. Exploratory drilling later proved that it was there.
The Standard of California also found oil near the Bahrain Islands, so in 1936, to expand its trading network and for commercial interests, it merged with the Texas Company to form Caltex, with a 50-50 share. Shortly afterwards, Standard of California began exploration in the Hasa region, under the control of King Ibn of Saudi Arabia.
Political events, the coups, the presence of the Soviet state, the growing nationalism of the Muslim nations, all contributed to a unified American action in the Middle East. The only obstacle to agreement was the French and Gulbenkian, who would only allow Exxon and Socony to merge with Caltech and ARAMACO if they shared in the spoils. As the French had not found any significant oil deposits in the areas under their control, the Iraq Petroleum oil company, Anglo-Persian and Royal Dutch Shell easily agreed.
In 1932, the Persian government and Britain had a financial disagreement, which led Reza Pahlavi Sr. to terminate the 66-year contract with the Anglo-Persian oil company on 27 November. The matter was discussed by the League of Nations in 1933, and a new contract was signed on 29 April 1933, in which the licence was again recognised as valid for £1 million. The company was obliged to pay the Persian government 20 percent of net profits instead of 16 percent. The Persian Government therefore granted the company the right to explore for and process and sell oil.
However, the conflicts between the great powers, the struggle for markets, political scandals, military coups and the rise of fascism were already foreshadowing the possibility of a second world war. Some experts even went so far as to predict that a war could reconcile the many conflicting interests through mutual sacrifice. It would involve redistributing raw materials and markets, sharing maritime hegemony without infringing on the rights of smaller nations.
Iran's strategic importance and the intervention of the great powers
The ruler of Iran, Reza Pahlavi Shah, was politically linked to the Germans, as he believed that this was an opportunity to get rid of the British. He planned to establish the Great Iranian Empire with the help of the Germans. His decision was influenced by the fact that Germany was already one of Iran's largest trading partners in the 1930s. There was no lack of intrigue on the part of the Russians during the war. With Soviet support, Mousaddeq, operating under central Iranian control, sought to organise the Iraqi Communist Party from within Iran with the help of the Shiites, and tried to win over the Shiites of southern Iraq. The efforts were more or less successful. However, the internationalist ideals among the nationalist-minded Sunnis failed to spread.
After Reza Pahlavi Shah announced the neutrality of the country, the two allies, the Soviets and the British, considering the strategic importance of Iran, called for the cessation of German agents' activities in the country. The Shah refused to do so, so on 25 August 1941, the Allies invaded the country, sank its naval fleet and occupied Iran in a few days. The Shah resigned and went into exile. At the request of the British, his 21-year-old son Mohamed Reza Pahlavi became Shah of Iran in September 1941.
