52. Telegram From the Department of State to the Embassy in Iran1

122913. Ref: State’s 120689.2

Department officer today called senior vice-presidents of all U.S. oil firms (except Occidental) whose production has been cut back in Libya and urged that companies make up these losses in Iran. Department officer emphasized 1) advantages to companies themselves in strong stable Iran, particularly at present, 2) Iranian use of revenues in constructive manner and 3) interest at highest level of U.S. Government in being as helpful to Iran as possible.
Continental and Marathon replied they would be pleased to take oil from Iran if they had tankers to haul it. But they cannot go into spot charter market. Transport costs from Persian Gulf to Europe now about $3.00 per barrel, thus raising price of Persian Gulf oil, on spot chartered tankers, to double levels called for by their sales contracts. Both companies are depending on force majeure clauses in contracts to cut back deliveries and are prorating available supplies to customers.
Texaco and Standard Oil of California said King Faisal had ordered Aramco to make up losses of Tapline through increased liftings from Ras Tanura. They are unable to do this. Only way companies [Page 123] could lift more from Iran at present would be to shift tankers there from Saudi Arabia and this could never be explained to Saudi Arabia.
All four company executives said they understood U.S. interest in matter and all said they would do what they could. None thought this would be very much. SoCal pointed out that its liftings from Iran this year were 20 percent over that of last year.
  1. Source: National Archives, RG 59, Central Files 1970–73, PET 15–1 LIBYA. Confidential. Drafted by Akins (E/ORF/FSE); cleared in NEA/IRN and NEA/ARP; and approved by Katz (E/ORF). Repeated to Jidda, Dhahran, and Kuwait.
  2. Telegram 120689 to Tehran, July 28, informed the Embassy that Trezise was instructed to try and persuade those companies with production cutbacks in Libya to make compensating increases in their production from Iran. This instruction followed a visit by Iranian Ambassador Afshar on July 24, who presented a request from the Shah of Iran that the United States do “all we can” to increase Iranian production. (Ibid.)