Oil Struck in Persia

In the spring of 1908, a drilling team in southwestern Persia struck oil at Masjed Soleyman, in the foothills of the Zagros Mountains. It was the first commercially significant oil discovery in the Middle East. The find transformed the region's economy and politics, tying Persia, and later its neighbors, to the strategic needs of the world's industrial powers for the next century.

The discovery grew out of a concession granted in 1901 by Mozaffar ad-Din Shah Qajar to William Knox D'Arcy, a wealthy British investor who had made his fortune in Australian gold mining. The deal gave him exploration rights over most of the country, excluding some northern provinces, in exchange for a payment and a promised share of any profits. Persia's Qajar rulers were short of money and were granting concessions to foreign interests to fund the state. D'Arcy's prospecting, led by the engineer George Reynolds, was costly and unrewarding for years, and by 1908 his funds were nearly exhausted. The Burmah Oil Company had by then become a partner, and the drillers were reportedly close to being told to stop.

The strike came after that long, difficult effort, and the oil that rose at Masjed Soleyman proved abundant enough to justify large-scale development. In 1909 the Anglo-Persian Oil Company was founded to exploit the field, and a pipeline and a refinery at Abadan, on the Persian Gulf, followed in the years afterward. Just before the First World War, the British government bought a controlling stake in the company, motivated largely by the Royal Navy's shift from coal to oil-fired ships. The firm later became the Anglo-Iranian Oil Company and, eventually, BP.

The consequences were far-reaching. Oil revenue gave Britain a secure fuel supply and a major foothold in the Gulf, but Persians increasingly saw the terms of the original concession as unfair, since the country received only a small share of the proceeds. Disputes over royalties and control ran through the twentieth century. They culminated in the nationalization of the industry under Prime Minister Mohammad Mosaddegh in 1951, and in the 1953 coup that removed him, which involved British and American intelligence services.

Masjed Soleyman also set a pattern. Over the following decades, geologists and companies found enormous reserves in Iraq, Saudi Arabia, Kuwait, and elsewhere, often under similar concession arrangements. The 1908 strike thus marks the start of the Middle East's central role in the global energy economy, along with the long struggle over who should benefit from the region's resources.