214. Memorandum of Telephone Conversation Between Secretary of State Rusk and the Assistant Secretary of State for Economic Affairs (Solomon)1


Sec asked for a summary of the present oil situation. S asked if he had gotten his memo with letter to sign. Sec had signed letter2 but what is the practical situation. S said nothing from Iraq or Syria for anybody; Libya so far ports closed but govt has privately told people that waiting tankers should not go away, feel maybe they can open them shortly; Saudi Arabia, no oil to UK and US destinations but our companies can supply American forces in Southeast Asia; Kuwait, no shipments to UK-US destinations; Iran ok; Algeria, situation confused, most goes to France and it is flowing, no real problem for us there. S said Aramco itself had to close its refinery in Saudi Arabia and its loading facilities there for finished products because of labor troubles, and also the crude oil pipeline to Bahrein. Sec asked about supply to Western Europe. S said normally 9–1/2 million flows to Europe; now 1.3 from Iraq and 1.7 from Libya is out; Saudi 2.3, but that may not be meaningful; Kuwait 2.3, Algeria .7. Sec asked if situation should be characterized as serious, critical, disastrous. S said the most serious immediate impact is the closing of the Suez Canal; if oil producing govts do not escalate, we calculate that short fall will be somewhere for Europe and Japan only 5–15%, but so far the major oil producing govts are not extending the US–UK destination ban to US–UK flags, owners or companies.3

  1. Source: National Archives and Records Administration, RG 59, Rusk Files: Lot 72 D 192. No classification marking. Prepared by Carolyn J. Proctor.
  2. A letter of June 8 from Rusk to Secretary of the Interior Stewart L. Udall stated that Algeria, Kuwait, and Bahrein had prohibited the export of petroleum to the United States and the United Kingdom; Iraq had ordered the Iraq Petroleum Company to cease operations; Aramco’s Trans Arabian Pipeline had been closed, as had the Suez Canal; and Libya had ordered foreign oil companies to cease operations. Rusk stated that these developments created an oil supply emergency adversely affecting the capability of the United States and its allies to meet their security responsibilities. He called for the initiation of emergency procedures. For text of the letter, see Foreign Relations, 1964–1968, vol. XXXIV, Document 235.
  3. A paper titled “The Middle Eastern Oil Problem” that Solomon sent to Bundy on June 9 stated that the flow of Arab oil was about 40 percent of normal. Saudi Arabia, Libya, and Iraq were exporting no oil, Kuwait and Algeria were embargoing oil to the United States and Britain, Abadan was closed by a strike of Iraqi tanker pilots, and Bahrain was operating at reduced capacity. It stated that the flow might increase over the weekend, leaving a relatively limited shortfall of 1.5 million barrels/day, combined with a serious tanker problem as long as the Suez Canal remained closed, but if the Arab producers tried to use oil denials to pressure the United States into dislodging the Israelis from the West Bank, a major supply crisis could extend for a considerable time. (Johnson Library, National Security File, NSC Special Committee Files, Economic)