How did Britain come to play such a pivotal role in bringing oil into the global spotlight in the Middle East ?
And how did the oil that lay dormant beneath the desert sands reshape the region - and eventually the world economy ?
Longtunman will walk you through the story.
As Britain rose to become a dominant maritime power, only one major rival remained in control of the main trade routes connecting Europe and Asia: the Ottoman Empire.
However, while Britain was growing stronger - driven by the Industrial Revolution - the Ottoman Empire was moving in the opposite direction.
Its power weakened to the point that it became known as the “Sick Man of Europe.”
One major reason was the shift in global trade patterns.
As maritime trade between Europe and Asia expanded rapidly, the land routes controlled by the Ottomans gradually lost importance. As a result, the empire’s trade revenues declined sharply.
At the same time, the empire still had enormous expenses.
The Ottomans governed vast territories stretching from Eastern Europe to Egypt, the Middle East, and the Persian Gulf.
To make matters worse, the empire became involved in numerous wars with European powers, including the Crimean War.
With revenues falling and costs rising, the Ottomans increasingly relied on loans from European countries such as Britain, France, Austria, Italy, and the Netherlands.
Eventually, the empire defaulted on its debts.
In response, the creditors created the Ottoman Public Debt Administration to collect taxes within the empire and repay the debts directly.
At that point, the Ottoman Empire was no longer fully sovereign.
Foreign powers had gained significant influence over its internal finances.
This meant that European nations could pursue their interests in Ottoman territories with little resistance.
One example was Egypt.
Although Egypt was technically part of the Ottoman Empire, Britain wanted control of it because of its strategic importance for maritime trade.
Britain purchased a major stake in the Suez Canal, eventually becoming the largest shareholder with about 44%.
When political instability erupted in Egypt, Britain used military force to occupy the country - with support from France.
Facing increasing pressure from Britain and France, the Ottomans sought a new ally to balance European influence: the German Empire.
Germany and the Ottomans began developing closer ties, eventually launching an ambitious infrastructure project - the Berlin-Baghdad Railway.
The railway was planned to run from Berlin all the way to Baghdad in present-day Iraq.
To reach Baghdad, the railway would pass through the Austria-Hungary, creating a geopolitical alignment between Austria-Hungary, the Ottoman Empire, and Germany.
This development alarmed Britain.
If completed, the railway could transport goods from Asia to Europe faster than the maritime routes dominated by the British.
Britain therefore attempted to undermine the project by multiple means.
London banks were discouraged from financing the railway, and Britain also negotiated a secret agreement with Mubarak Al-Sabah.
Under this agreement, Kuwait became a British protectorate and agreed not to allow other powers - especially Germany - to build a port or railway terminus there.
Tensions intensified even further when oil was discovered in the region.
In 1909, the Anglo-Persian Oil Company was established following major oil discoveries in Persia.
Britain was not the only country aware of the region’s oil potential.
Other Western powers also wanted exploration rights in Ottoman territories.
Eventually, Britain and Germany reached a compromise by establishing the Turkish Petroleum Company.
Germany participated through Deutsche Bank with roughly a 25% stake.
However, Britain still distrusted Germany.
The British government decided to acquire a controlling stake in the Anglo-Persian Oil Company to guarantee its own oil supply.
Later, the Anglo-Persian Oil Company also became the largest shareholder in the Turkish Petroleum Company - giving Britain influence over both companies.
Meanwhile, Germany continued construction of the Berlin–Baghdad Railway, which was not only intended for transporting goods but also potentially oil.
Britain responded by secretly encouraging Arab resistance against Ottoman rule, slowing the project’s progress.
Then history took a dramatic turn.
When World War I broke out, the Ottoman Empire eventually collapsed following the victory of Britain, France, and their allies.
The railway project ended.
The Ottoman territories were divided among the victors.
The Turkish Petroleum Company became a tool for allocating oil exploration rights across former Ottoman lands.
Germany’s former 25% stake was transferred to France through Compagnie Française des Pétroles.
But the United States also demanded a share, arguing that it had joined the war on the winning side.
American oil companies eventually entered the consortium through the Near East Development Corporation, led by companies that later became part of ExxonMobil.
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A major turning point occurred when the consortium discovered a massive oil field near Kirkuk.
Following this discovery, the shareholders agreed that oil exploration within former Ottoman territories must be conducted exclusively through the Turkish Petroleum Company.
At first glance, this agreement seemed designed to prevent conflicts between Western powers.
But in reality, it also allowed Britain to maintain a strategic advantage.
Britain already controlled oil production in Persia through the Anglo-Persian Oil Company - which lay outside the former Ottoman territories and therefore outside the agreement.
In simple terms, Britain effectively gained access to oil through two channels, while other countries had only one.
The United States was not willing to let Britain dominate Middle Eastern oil.
American companies began turning their attention to the Arabian Peninsula - an area largely ignored by the Ottomans and widely seen as barren desert.
Opportunity emerged when Abdulaziz Ibn Saud sought new revenue sources as income from pilgrims visiting Mecca declined.
Saudi Arabia offered oil concessions to foreign companies but preferred not to work with Britain, which already held influence in Iran and Iraq.
Instead, the concession went to Standard Oil of California.
This led to the creation of the California-Arabian Standard Oil Company, which later became the Saudi Aramco in 1944.
Ownership of the company was divided among major American oil firms :
- Standard Oil of California 30%
- Texaco 30%
- Standard Oil of New Jersey 30%
- Mobil 10%
As Western companies controlled the region’s oil resources, producing countries began to push back.
Saudi Arabia was among the first to demand a 50–50 profit-sharing arrangement with foreign oil companies.
Even after agreements were reached, companies often kept oil prices low - reducing the profits received by host countries.
During the 1950s, inflation-adjusted crude oil prices were around $30 per barrel, equivalent to roughly 6.8 baht per liter.
In response, Saudi Arabia joined other producers to establish the OPEC in 1960.
The group aimed to influence global oil prices by coordinating production levels.
Saudi Arabia also gradually purchased shares in Aramco until it eventually gained full ownership.
Other Middle Eastern countries followed similar paths, including Kuwait, Qatar, and the United Arab Emirates.
Some countries took even stronger measures.
Iran attempted to nationalize its oil industry after disputes with Britain.
Although early attempts failed, the country later regained control under the Shah’s government - with support from the United States.
Following the Iranian Revolution, Iran fully nationalized its oil industry.
Iraq later took similar action, nationalizing oil assets previously controlled by the Iraq Petroleum Company.
As a result, Britain eventually lost direct control over many of the region’s major oil fields.
Today, the United States and Britain no longer directly own most oil resources in the Middle East.
However, their oil companies remain involved through partnerships, technology, and expertise in advanced drilling.
Military alliances and overseas bases across the region also reflect the deep historical ties formed during this period.
What cannot be denied is that Western nations played a crucial role in transforming the Middle East into the energy heart of the global economy.
Through technology and investment in oil exploration, they helped turn the region - from a historic crossroads of trade linking Europe, Asia, and Africa - into one of the world’s most important energy hubs.
As a result, even though Middle Eastern economies together account for less than 5% of global GDP, their influence on the world economy remains enormous.
Because whether the global economy accelerates or slows down, one critical factor often remains the same :
The countries that hold the power to influence it are those controlling the world’s most important black liquid - oil.