Northern Iran Oil and the Rivalry of Foreign Powers:

Revisiting a Forgotten Chapter

The issue of Northern Iran’s oil—from the late Qajar period to the 1940s—was one of the key foreign-policy concerns of modern Iranian history. Although no solid evidence ever confirmed the existence of commercially viable reserves in the region, the matter turned into a major geopolitical dispute due to the intense rivalry among global powers.

Political Weight Overshadowing Economic Value

Despite the absence of proven oil fields in northern Iran, the region became a focus of foreign attention. For Russia, Britain, and later the United States, the issue served more as a test of influence and strategic leverage than an economic opportunity.

According to historical records, the main actors had different motivations:
    •    Tsarist Russia and later the Soviet Union considered northern Iran their political and security buffer zone and opposed any third-party involvement.
    •    Britain, already dominant in southern Iran’s oil industry, sought to prevent rival powers from gaining ground in the north.
    •    The United States, newly emerging in global oil competition, attempted to secure a concession but eventually retreated under Russian and British pressure.
    •    The Iranian government, trying to balance foreign influence, moved toward the policy of “negative balance,” which later paved the way for the oil-nationalization movement.

From Early Concessions to International Disputes

The story began in 1895, when Naser al-Din Shah granted a concession to Mohammad-Vali Khan Khal‘atbari for oil exploration in Tonekabon, Kojur, and Kelarestan. The rights were later transferred to a Georgian-Russian businessman, Khoshtaria.

During the Russian occupation of northern Iran in 1916, the Tsarist government attempted to formalize this concession. After the 1917 Revolution, however, Iran annulled Khoshtaria’s rights.

Britain quickly seized the opportunity, purchased the concession, and registered the North Persia Oil Company in London — a move that provoked both Iranian officials and American oil companies.

The American Attempt and Its Failure

Encouraged by diplomatic efforts in Washington, Iran granted the northern oil concession to Standard Oil of New Jersey in 1921. But the agreement never materialized. The Soviet Union objected to any U.S. presence near its borders, and Britain also opposed American involvement in Iran’s oil sector.

Under joint pressure from both powers, the concession collapsed and was never implemented.

A Prelude to Iran’s Oil Nationalization

Although no oil was ever extracted from northern Iran, the political crisis surrounding the concessions had lasting consequences. The struggle ultimately strengthened the Iranian government’s tendency toward negative balance and influenced the ideological foundations of the oil-nationalization movement in the 1950s.

This forgotten chapter demonstrates how northern Iran’s geopolitical significance far exceeded its potential economic value and how international rivalry shaped one of Iran’s most important political debates.

 A Prelude to Iran’s Oil Nationalization

Although no oil was ever extracted from northern Iran, the political crisis surrounding the concessions had lasting consequences. The struggle ultimately strengthened the Iranian government’s tendency toward negative balance and influenced the ideological foundations of the oil-nationalization movement in the 1950s. This forgotten chapter demonstrates how northern Iran’s geopolitical significance far exceeded its potential economic value and how international rivalry shaped one of Iran’s most important political debates.