Middle East Oil

Report Outline
Middle East Oil and Arab Nationalism
Western Development of Mideast Oil
Mideast Gains from Oil Exploitation
Means of Assuring West's Fuel Supply
Special Focus

Middle East Oil and Arab Nationalism

Easing of crisis conditions in the Middle East has relieved in part, but only in part, the anxiety of Western governments over possible interruption to the flow of oil from a region which holds the bulk of the free world's petroleum reserves. The British-French invasion of Egypt in 1956, after President Gamal Abdel Nasser's nationalization of the Suez Canal, showed that Great Britain and France were ready to fight to assure themselves of continued access to Middle East oil. The immediate dispatch of U.S. Marines to Lebanon and of British paratroopers to Jordan, after the successful nationalist revolt in Iraq in mid-July, seemed to show that the United States now attaches the same importance as its North Atlantic allies to maintaining the flow of Mideastern oil.

The new regime in Iraq lost no time in seeking to dispel the fears of Western governments—thus to ward off the danger of direct intervention in the country's affairs. Baghdad radio announced on July 18 that Iraq oil would continue to move to western markets without interruption. Premier Abdul Karim el-Kassem declared, July 22, that “Oil is as important to us as it is to the West and to world economy.” Iraq's new delegate to the United Nations, Hashim Jawad, stated in New York the same day that there would be no nationalization of the petroleum industry and that all contracts with foreign interests would be respected. However, the revolutionary regime is already pressing for more oil production, for more local development of by-products, and above all, for a larger share of the large profits earned by the oil companies.

West's Vital Interest in Mideast Resources

The concern of Western governments is explained by the fact that more than 70 per cent of the oil reserves outside Communist control lie in the region around the Persian Gulf. Since World War II, “the center of gravity of world oil reserves,” as one American oil expert puts it, “has moved from this continent plumb into the Middle East.” Whereas 20 years ago the United States had 59 per cent of proved free world oil reserves and the Middle East only 17 per cent, today the United States has only 14 per cent and the Middle East 71 per cent. Moreover, during 1957, for the first time in 14 years, U.S. production exceeded new discoveries, so that the country's proved oil reserves declined from 30.4 billion to 30.3 billion barrels. In the Middle East, on the other hand, exploration enlarged known oil reserves by about 15 per cent, to nearly 170 billion barrels.