Foreign Relations of the United States, 1955–1957, Suez Crisis, July 26–December 31, 1956, Volume XVI

624. Circular Telegram From the Department of State to All Diplomatic Missions, Legations, and the Mission at the United Nations¹

Washington, November 29, 1956—8:37 p.m.

451. Following is text press release to be issued 12 noon EST November 30 by Office Defense Mobilization. For your information and not for release elsewhere.

Begin verbatim text

The Director of ODM, after consultation with the Acting Secretary of State and with the approval of the President, today requested the Secretary of the Interior to authorize fifteen US oil companies to coordinate the efforts they have been making individually to assist in handling the oil supply problem resulting from the closing of the Suez Canal and some pipelines in the Middle East.

The present problem is essentially a transportation problem. The number of tankers available to carry oil is not sufficient to permit maintaining oil consumption at normal levels everywhere in the world. The shortage of tankers also means that, although the world supply of oil is adequate, under present conditions normal output cannot be shipped from the producing areas of the Middle East. The US desires to cooperate as fully as possible in lessening the effects of the present situation in both consuming and producing countries. The contemplated coordination of industry efforts will insure the most efficient use of tankers and the maximum availability of petroleum products, but there will remain, in all probability, some shortages in certain consuming areas which cannot be overcome as long as the Suez Canal remains closed and the pipelines are unrepaired. End verbatim text.

Anticipate release of foregoing (which will result in activation Middle East Emergency Committee) will bring considerable reduction in criticism US failure hitherto to activate Committee but will prompt many questions both technical and other regarding reasons for finally starting committee and likely effect of it.

While there will be effort on part press to interpret this 1) as result pressure other countries especially British and French; 2) and that delay in announcement represents effort on part US to put pressure on British, French to withdraw from Egypt we should not acknowledge either. Interpretative comment should be kept to minimum in order de-emphasize as much as possible significance of release. Primary emphasis should be placed on:

1. Premature activation Committee would have jeopardized oil supplies and ability Committee work effectively.

2. Fact action taken is to minimize effect both on consumers and producers of oil throughout world who are affected by situation. Avoid any suggestion action represents support for British and French military action.

3. Basic problem is one of transportation and Committee will be concerned primarily with problem coordinating transport movements in order maximize oil deliveries.

4. Despite most energetic efforts at coordination oil movements normal Middle East suppliers and their customers particularly in Europe will experience reduction in output and supplies until normal channels are opened. FYI shortage in Europe may amount to as much as 20-25 percent. Shortages elsewhere probable but extent not yet clear. End FYI.

5. Delay in activating Committee has not significantly lessened deliveries due fact that last deliveries from Middle East just recently arrived and substantial flow oil from US Gulf already under way. Fourth week November this amounted over 300,000 bbls per day crude in contrast no oil first week November.

6. Start of Committee has no financial aid implications. While there will be additional dollar costs for alternative oil supplies countries should be able to meet these for a while from their own resources. Later problems this field will in any case be subject for governments not committee of oil companies.

7. It is anticipated that OEEC with the help of industry committees in Europe will determine European requirements and the basis for division of available oil supplies among its member countries.

Hoover

1. Source: Department of State, Central Files, 840.04/11–2956. Official Use Only. Sent Priority to all West European posts. Telegram 3837 to London, November 29, informed Aldrich: “In belief it may be helpful to Lloyd and Pineau in their discussion tomorrow re Suez request you inform Lloyd at earliest opportunity tomorrow morning that announcement contained in immediately following priority circular 451 re oil will be issued Washington 12 noon EST Nov. 30.” (Ibid.)