198. Telegram From the Consulate in Dhahran, Saudi Arabia, to the Department of State 1

397. Iran Oil.

1.
December 17 Min Pet Yamani told Brougham of Aramco he disturbed and embarrassed by reports of Consortium-NIOC settlement.2 Says others in SAG already asking if Iran being helped at SAG’s expense and what he proposes do about it.
2.
Using backgrounder sent him by parents,3 Brougham reminded him OPEC programming gave Iran strong arguing point.
3.
Pointed out that in 1965 Saudi Arabia has been preferred source crude to meet fluctuating increased needs and with late winter in Europe early December liftings had dropped. In effect SAG not losing, merely not gaining as much as had been hoped.
4.
Iran had made arrangements barter oil in Eastern Europe in expectation greater success in district one than has been case. Royalty oil will replace this and not affect markets Consortium now has.
5.
Relinquishment merely brings Iran to point SAG reached in 1963.
6.
Effect IPC troubles not yet predictable but might result in higher liftings here as well as elsewhere.
7.
Yamani said he and others should keep close eye on liftings and if they discovered Iran being helped at SAG expense they would learn a lesson.
8.
Comment: For the moment Yamani would appear to be pacified.
Allen
  1. Source: National Archives and Records Administration, RG 59, Records of the Department of State, Central Files, 1964–66, PET 6 IRAN. Confidential. Repeated to Jidda, Kuwait, and Tehran.
  2. On December 10 Ambassador Meyer reported in telegram 2473 from Tehran that Iran had reached agreement with the Consortium and the deal would be announced in the Majlis the following day. “As Addison [the Consortium’s representative] believes, and so do we, that as some of my Beirut oil friends phrased it, ‘Oil’s well that ends well.’” (Ibid.)
  3. Reference is to parent oil companies.