As the site of the first oil exploration in the Middle East, the Khuzestan field proved a vital strategic resource for Britain throughout the war and after. Beyond the 1907 Anglo-Russian Agreement, the discovery of oil further tied Iran’s fate to the fortunes of the Great War. After the war, and throughout the twentieth century and beyond, no other resource came to play as crucial a role as oil in shaping Iranian politics and economy. In 1900 a British financier, William Knox D’Arcy, who met the head of Iranian customs at the Paris world exhibition, was persuaded to acquire a concession from the Qajar government for the discovery, production, and export of the vaguely identified oil fields of southern Iran.
The sixty-year monopoly, granted tax-free to D’Arcy, offered remarkable advantages to the concessionaire in exchange for only a £20,000 ($100,000) advance, another £20,000 worth of stocks, and 16 percent of the net profit from the revenue of all the companies that were to be incorporated under the concession. In 1901, Mozaffar al-Din Shah ratified the concession, following a successful campaign led by the British envoy in Tehran and D’Arcy’s representative, who once worked for Julius Reuter and was recommended to D’Arcy by Henry Drummond Wolff. It was as if D’Arcy was to compensate for the failures of the previous Reuter and Regie concessions.
After several years of fruitless explorations, in May 1908 D’Arcy’s British engineers struck a massive oil reserve in the Masjed Soleiman oil field in central Khuzestan, inside Bakhtiyari territory. Soon, the construction of a 140-mile pipeline to the refinery and port facilities in the island of Abadan on the westernmost Iranian shores of the Persian Gulf made possible the overseas export of an increasing volume of oil. As early as 1909, the British Admiralty, with its eye on utilizing D’Arcy’s concession, conceded to forming the Anglo-Persian Oil Company (APOC) as a private enterprise.
In due course, the huge volume of Khuzestan oil offered an incentive to the British government to switch, following the German navy, from coal to oil, eventually for the entire Royal Navy fleet. Despite much resistance from conservatives, by 1914 the British government had acquired the majority of APOC stocks, allowing the government full control over exploration, production, and export. In his role as the First Lord of the Admiralty, Winston Churchill was the driving force behind the purchase, an accomplishment he later hailed as one of the greatest in his long career. APOC’s purchase, a rare acquisition by the British government, set Iran not against a private concessionaire, but the British Empire.
The popularity of automobiles and greater reliance of all industries on oil revealed the British dependency on the Iranian resource throughout the war and beyond as an alternative to California oil, Russian-owned Baku oil, and the other oil fields explored in Burma and elsewhere. Subsequently, the security of the Khuzestan oil fields and installations became a major concern of the British, concern not only in their dealings with the Iranian central government but also in their dealings with the Bakhtiyari khans and the Arab sheikhs of the Banu Ka‘b confederacy, who had a virtual control over the Iranian port of Mohammara (later Khorramshahr) and its vicinity.
As early as 1907, Major Percy Cox, then the British political resident in the port of Bushehr, arranged for the arrival of a detachment of Indian sepoys to boost the security of the installations and pipelines. By 1916 this detachment had been upgraded to a full military force, called the South Persian Rifles, based in Bandar Abbas. Despite stiff resistance from the Iranian nationalists, the South Persia Rifles soon was in control of the entire British zone of influence in southern Iran.
Jameh Mosque of Dezful, Khuzestan, South Iran
