As Iran moved to seize control of the Anglo-Iranian Oil Company's vast holdings in 1951, tensions with Britain escalated toward a confrontation that would eventually draw in the CIA and MI6 in a covert 1953 coup. The nationalization fight became a defining early episode of Cold War resource politics in the Middle East.
For decades, Britain's Anglo-Iranian Oil Company (predecessor to BP) extracted staggering profits from Iranian oil fields while paying the Iranian government a fraction of the revenue—by some estimates, Britain earned more in taxes on the oil than Iran received in royalties from its own natural resource. Popular resentment simmered for years before erupting into a nationalist movement led by the aristocratic, Swiss-educated Prime Minister Mohammad Mossadegh.
Mossadegh's government nationalized the oil industry in 1951, a move enormously popular domestically but treated by London as an existential threat to British commercial interests and prestige. Britain organized a global boycott of Iranian oil and lobbied Washington to intervene, initially without success under Truman.
The standoff simmered for two years until 1953, when the CIA and Britain's MI6 orchestrated Operation Ajax, a covert coup that overthrew Mossadegh and restored the Shah to full power. The episode left deep and lasting scars on Iranian politics and U.S.-Iranian relations, feeding directly into the resentments that would erupt in the 1979 Islamic Revolution.