56. Telegram From the Department of State to Certain Diplomatic Posts1

159012. Subj: Libyan Oil Negotiations. Following is Noforn and FYI only.

Ambassador Johnson met September 25 with Chief Executive officers of the seven major international oil companies to discuss effects of Libyan oil negotiations on world oil supplies, prices, our political relations with oil producing and consuming countries, and the future of the international oil industry.
Ambassador Johnson stressed he was not trying to tell them what they should do, but wanted to discuss with them consequences of either line of action they might take, i.e. accepting or standing firm against Libyan demands.
Companies responded that rejection Libyan demands would almost certainly result in closed down production, which in turn would result in fuel shortages in Europe this winter, higher prices, and that effect would be felt in US as well. Companies said we may be on the verge of a crisis worse than the Iranian oil crisis in the early 1950s. Companies stressed problems of short term fuel shortages should be weighed against consequences of giving in to Libyan demands which would undermine principle of sanctity of contracts and the spreading of higher oil prices to the Persian Gulf, Venezuela and other producing areas. Companies asked whether USG would support their stand diplomatically in Europe in case of production cutbacks in Libya. Ambassador Johnson said he could not give such assurances emphasizing we had little economic or political leverage in situation.
Companies are obviously distressed at “Hobson’s choice” they face and no consensus has yet developed.
Details follow by septel.2


  1. Source: National Archives, RG 59, Central Files 1970–73, PET 6 LIBYA. Secret; Limdis. Drafted by Clark; cleared in draft by U. Alexis Johnson and Newsom; and approved by Katz. Sent to London, The Hague, Tripoli, Bonn, Paris, Rome, Brussels, USNATO, Tehran, Dhahran, Jidda, Kuwait, Beirut, USOECD Paris, USEC Brussels, and Algiers.
  2. A full account of the meeting is in telegram 159023 to the same posts, September 26; ibid.