Iran-US Relations: The Untold History of Oil, Coups, and 7 Decades of Conflict

Introduction: The Roots of Iran-US Relations

For many years, Iran has defined itself, to some extent, in opposition to the United States — and indeed, there is a turbulent history between the two countries. Such nations and their terrorist allies form an axis of evil that is accumulating weapons to threaten world peace.

Relations in Iran-US relationshave been mostly adversarial since the 1979 Islamic Revolution. There was no embassy here; it was a CIA center — a nest of spies where they were plotting against the Iranian people. But the seeds of this chapter in Iran-US relations were sown decades earlier.

The D’Arcy Concession and British Oil Control (1901–1951)

To understand how significant this chapter is and how it shaped the country’s future and Iran-US relations, we must go back to the beginning of the century, when Iran was still known as Persia. Like many countries in the region, its oil assets were overseen by foreign powers since their discovery in 1901.

The British government encouraged the entrepreneur William Knox D’Arcy to invest in the Persian oil fields. The British brokered a deal between D’Arcy and the then Shah of Iran, Muzaffar al-Din. D’Arcy was granted a 60-year concession to explore, transport, and sell petroleum, natural gas, asphalt, and minerals in three-quarters of the country. Under this deal, the Shah received twenty thousand pounds in cash and an additional twenty thousand pounds in shares, with the country receiving only sixteen percent of the profits.

The D’Arcy Agreement is historically known as the deal that compromised Iran’s ability to profit from its own oil resources for decades.

The 1908 Oil Discovery: The World’s Largest Find

In 1908, a significant oil reserve was discovered in Masjed Soleyman in southwestern Iran. This was the world’s largest oil discovery at the time and sparked a wave of exploration that transformed the region’s future. Following this discovery, the British government acquired the D’Arcy Concession and the Anglo-Persian Oil Company, which later became British Petroleum (BP) in 1954.

Navies and national economies would increasingly run on oil, replacing coal. Iranian oil significantly aided the British Navy during World War I. Winston Churchill, who brokered the deal to acquire shares in the D’Arcy Concession, affirmed its importance, stating that “fortune has bestowed upon us a gift from the fairy world, beyond our wildest dreams.” For the next 50 years, Iran’s vast oil reserves remained under British control — until Mossadegh came to power.

Mossadegh and the Nationalization of Iranian Oil

In 1952, Time magazine named Iranian Prime Minister Mohammad Mossadegh its Man of the Year for 1951, for his efforts to nationalize his country’s oil assets despite increasing economic pressure from Britain. Mossadegh was Iran’s 35th prime minister, but his government succeeded in doing what no other leader had done before.

After World War II, the rule of Shah Mohammad Reza Pahlavi was weakened by the growing nationalist voices in parliament. In March 1951, Prime Minister Haj Ali Razmara, a staunch opponent of oil nationalization, was assassinated. Immediately after, nationalists in the Majlis nominated Mossadegh as their new prime minister.

Iran’s Oil Nationalization (1951)

Fearing the strength of the nationalist movement, the Shah was forced to approve Mossadegh’s nomination, and in May 1951, parliament voted to nationalize the oil industry. Speaking on his victory, Mossadegh famously declared:

“Our years of negotiations with foreign countries have yielded no results. With oil revenues, we can cover our entire budget and fight poverty, disease, and backwardness among our people.”
— Prime Minister Mohammad Mossadegh, 1951

The nationalization was a blow to British economic interests and the very existence of the British Empire. Britain took the matter to the International Court of Justice and imposed sanctions on the newly nationalized industry, making it impossible to sell the oil on the world market. The British hoped that the economic pressure would undermine Mossadegh’s popularity and force him from power, but he remained defiant.

The 1953 CIA-Backed Coup: Operation AJAX

In an attempt to regain control of Iran’s oil industry, the British government approached the United States for help in plotting a coup. Harry Truman’s administration had rejected the idea of a coup against Mossadegh in 1952, but when Dwight Eisenhower came to power in 1953, the British managed to persuade him by warning him about Mossadegh’s alleged communist ties. Demonstrations and riots erupted in the streets of Tehran.

The initial plan to remove Mossadegh failed, but the two allies finally succeeded when they relied on royalist supporters — that is, supporters of the exiled Shah. General Zahedi surrounded Mossadegh’s house with tanks, and protesters clashed with his guards. Mossadegh and his cabinet eventually surrendered, and General Fazlollah Zahedi became the new Prime Minister.

The US then restored Shah Mohammad Reza Pahlavi’s pro-Western regime to power. This was the first foreign intervention carried out by the newly formed CIA. This agency, with the help of the British MI6, overthrew Iran’s first democratically elected government. This marked the beginning of events that have shaped Iran-US relations to this day.

Aftermath: Mossadegh’s Trial and Legacy

At the military court in Tehran, where he was being tried for treason, Mossadegh was sentenced to three years in prison, then kept under house arrest until his death. His family was forced to bury him on his own property.

The removal of Mossadegh transformed the country from a constitutional monarchy into an imperial dictatorship, poisoning Iran-US relations for a generation. In 2000, Secretary of State Madeleine Albright acknowledged for the first time America’s role in the 1953 coup, but this event was clearly a setback for the nation’s political development. Read the full declassified documents at the National Security Archive, George Washington University.

In 2013, parliament passed a bill authorizing the government to sue the US for its involvement in the coup, following the release of classified documents detailing how the CIA orchestrated it as part of American foreign policy.

SAVAK, the Shah, and the Seeds of Revolution

With the goal of overthrowing Mossadegh’s government through legal or quasi-legal means accomplished, the US government helped the Shah establish his notorious secret police force in 1957, known as SAVAK. SAVAK was tasked with monitoring the Shah’s political opponents and even citizens living abroad. This agency tortured many, and its agents received training from the CIA in interrogation techniques.

But the alliance between the Shah and the US ignored the growing anger on the Iranian streets against the Shah’s repression and American interference. In late December 1977, during a lavish New Year’s Eve celebration, US President Jimmy Carter praised the Shah, saying he had made his country an island of stability in one of the world’s most turbulent regions.

Just over a year later, that stability collapsed entirely.

The 1979 Islamic Revolution and the Beginning of Modern Hostility

The animosity toward the Shah and American policies culminated in his removal from power. Religious leader Ayatollah Khomeini, who played a crucial role in the overthrow, returned to the country after 15 years of exile. His return marked the beginning of more than four decades of hostility between Iran and the United States.

Since 1984, the US has designated Iran as a state sponsor of terrorism, and although there have been periods of negotiation and de-escalation, changes in administration and regional proxy wars have once again brought the two countries strained Iran-US relations further.

Modern Tensions: Sanctions, Nuclear Deal, and Soleimani

Iran-US relations have been under renewed strain have been escalating since the Trump administration withdrew from the nuclear deal in 2018. For a very long time — precisely since 1979 — countries had tolerated destructive and destabilizing behavior in the Middle East and beyond. The United States launched a maximum pressure campaign aimed at crippling Iran’s economy and thereby halting its nuclear program and regional expansion. Tehran responded with a campaign of maximum resistance, demonstrating its capacity to harm American interests in the region.

For a full analysis of the JCPOA collapse, see the Council on Foreign Relations backgrounder on Iran’s nuclear program.

The Assassination of Qassem Soleimani (January 2020)

In January 2020, the United States assassinated Qassem Soleimani, Iran’s most revered military commander. Soleimani was the head of the Quds Force of the Revolutionary Guard. His controversial role in the Syrian war had expanded Tehran’s military presence in the region.

President Hassan Rouhani drew parallels between Soleimani’s assassination and the 1953 coup, stating: “This crime committed by the US was similar to the bizarre attempt and the downing of the Airbus passenger flight in the Persian Gulf. This crime will never be forgotten.”

Trump claimed that by killing Soleimani, America saved many lives, but for many Iranians, he was another national hero — much like Mossadegh — whom Washington removed from power against the will of the people. Read the full coverage at BBC News.

Conclusion: The Legacy of Iran-US Relations

The history of Iran-US relations is not simply a story of ideological conflict — it is, at its core, a story of oil, empire, and covert intervention. From the D’Arcy Concession of 1901 to the CIA coup of 1953, from SAVAK’s torture chambers to the assassination of Soleimani, each chapter has compounded the grievances of the last.

And now it is easy to see why many Iranians are resentful of US intervention in their internal affairs. The seeds of this chapter in Iran-US relationswere not sown in 1979 — they were planted in 1953, when the world’s most powerful intelligence agency overthrew Iran’s first democratic government in the name of oil and Cold War strategy.

To be continued…

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