Walter J. Levy and the 1953 Iranian Oil Crisis: How an Oil Economist Shaped a Global Turning Point

The 1953 Iranian oil crisis is often remembered for its political intrigue and Cold War implications. Yet one of the most influential figures shaping Western thinking about the crisis was not a statesman or intelligence officer, but a petroleum economist: Walter J. Levy. His analysis of the global oil industry was integral to how the United States and Great Britain handled the crisis. His papers, housed at the American Heritage Center, are a treasure trove of knowledge in the political, economic, and social interests of the United States in the Middle East.

Walter J Levy, photographed for the *Journal of Petroleum Technology.* October 1952. Box 3, Folder 3, Walter J. Levy papers, Coll. No. 08428, American Heritage Center, University of Wyoming.

Who Was Walter J. Levy?

Walter J. Levy (1911-1997) was one of the twentieth century’s most respected oil economists. He was born in Hamburg to middle class Orthodox Jewish parents, Moses and Betty Levy. He studied law and economics at Kiel University in northern Germany, receiving his doctorate in law in 1933.

That same year, the shifting political environment of Germany would reach a sinister turning point when Adolf Hitler ascended to the chancellorship of the country. Along with the Nazi seizure of power came the persecution of Germany’s Jewish population. Levy, fearing for his life and ability to work, went into exile in Great Britain. His sisters survived the Holocaust. His father, however, died in 1938 after several years of being prohibited to practice law. His mother was deported and murdered in the Auschwitz death camp in 1942.

In Britain, he worked as a petroleum journalist, gaining acclaim and trust from both the petroleum industry and government officials who turned to him for his expertise. This success in Britain was short lived. In 1939 he was interred for being an “enemy alien” due to his German citizenship.

He became a refugee once again, heading to the United States. Here, he built a career as a journalist and government advisor on global petroleum trends. In 1946, Levy founded his own consulting firm, Walter J. Levy & Associates, which became influential across Europe and the Middle East. His analyses were valued for their clarity and ability to translate complex global economic dynamics into practical guidance for policymakers.

By the early 1950s, Levy had earned a reputation for unmatched expertise on oil economics; expertise that carried significant power during a moment when oil had become an essential part of postwar recovery and Cold War strategy.

Iranian Oil Crisis

Commemorative medal marking Naser al-Din Shah Qajar’s 1873 visit to London. Naser al-Din’s visit was the start of Anglo-Persian relations, as he was the first Iranian monarch to visit England. Box 2, Sir John Cadman papers, Coll. No. 04247, American Heritage Center, University of Wyoming.

The Iranian oil nationalization crisis emerged from decades of frustration over British dominance of Iran’s oil industry through the Anglo-Iranian Oil Company (previously the Anglo-Persian Oil Company). The company was founded in 1909, and went through several concessions over its existence, but one constant remained: British shareholders held onto a significant share of the profits, while Iran only held onto just a fraction of the company’s profits. AIOC was staffed largely by Iranian workers, who felt shafted that their work was creating such a massive profit for foreign shareholders while their communities did not get to share in the wealth. Enter: National Front.

Mohammad Mossadegh, a veteran parliamentarian, anti-monarchy activist, and leader of the pro-democracy National Front political party, became Prime Minister of Iran in 1951. He won with a campaign centered on reclaiming control of Iran’s natural resources.

A constitutionalist and staunch advocate of Iranian sovereignty, Mossadegh viewed nationalization as not only an economic policy, but a moral and political imperative. Under his leadership, Iranian Parliament (Majlis) approved the nationalization of Iranian oil, asserting Iran’s right to manage its own wealth while sending the rest of the world into panic at the implications.

Levy’s Perspective on the Iranian Crisis

In response to the nationalization vote and Mossadegh’s leadership, Britain imposed a sweeping embargo, Iran’s oil exports collapsed, and diplomatic negotiations stalled. At this moment, Levy’s expertise became particularly valuable. His papers at the AHC feature several documents about the nationalization crisis in Iran, from speeches given to oil industry conferences to analysis documents given to the British and American governments on how to move forward with the crisis. The crisis, in his view, was not so much about Iran as an individual case of oil nationalization but rather the implication that any foreign country with resources could disrupt a global industry.

*The Oil Forum* February 1954. Box 4, Folder 1, Walter J. Levy papers, Coll. No. 08428, American Heritage Center, University of Wyoming.

Levy’s core argument was that the Iranian crisis was not an isolated political dispute but a structural challenge to the global oil system. If Iran succeeded in nationalizing a major foreign-owned oil operation without compromise, other oil-producing nations might follow suit, weakening the multinational framework that coordinated supply and investment.

This was not only economically vulnerable for western nations, but had major military and hard-power implications. Oil was central to NATO’s military readiness, and Levy worried that disruptions in Middle Eastern supply would directly affect Western security. This security was so crucial in the aftermath of a world war that saw entire nations turned to rubble, and the Cold War with the Soviet Union had leaders worried that it may happen again.

Levy was also concerned for Iran, a nation that he did not believe had the military power, economy, or infrastructure to sustain oil manufacturing in this way. He worried that Iran, in taking ownership of its own oil operations, was going to cripple themselves to maintain it.

Levy’s work was essential to helping governments and industries understand the depth of the crisis. In July 1951, Levy accompanied negotiators to a meeting with Mossadegh in Tehran, though no concession was achieved.

Program for the Middle East Institute’s 1953 meeting about the crisis, where Levy delivered potential solutions with Iranian, British and American Leaders. Box 3, Folder 9, Walter J. Levy papers, Coll. No. 08428, American Heritage Center, University of Wyoming.

Operation Ajax

In response to the crisis, the United States’ Central Intelligence Agency (CIA) and Britain’s Secret Intelligence Agency (MI6) approved a plan to overthrow Mossadegh. Britain viewed Mossadegh’s leadership to be an economic threat, while the United States was worried that Mossadegh’s leadership could open the door to Soviet leadership.

The operation (which they called “Operation Ajax”) involved covert propaganda campaigns, political manipulation, and the bribing of Iranian officials and citizens to undermine Mossadegh’s leadership. Initial attempts failed; the Shah, Mohammad Reza Pahlavi, refused to remove the Prime Minister as he supported nationalization. But the propaganda campaign was working. Iranians were outraged, taking to the streets en masse – some in support of the Shah’s leadership, and others in opposition to Mossadegh (though, historians debate the authenticity of these protests, with some believing that the protests were part of the broader operation).

Mossadegh, fearing civil unrest, issued a decree to dissolve Parliament, effectively stripping the Shah of his powers, and giving himself power to rule. This act proved devastating for his leadership. The Shah issued a declaration replacing Mossadegh with General Fazlollah Zahedi, a loyalist and a favorite of the United States and the U.K.

The Shah fled the country temporarily, and in his absence, a power struggle between Mossadegh and Zahedi unfolded. Ultimately, Mossadegh was deposed, arrested, and sentenced to death. His sentence was commuted to life in house arrest, under which he remained until his death in 1967. The United States denied all involvement with the operation until 2013, when the CIA released declassified documents.

Mohammad Mossadegh leaving court during his military tribunal. November 8, 1953. The Associated Press. (accessed through Wikimedia Commons).

The Legacy of Iran’s Oil Nationalization Crisis

The Iranian oil nationalization crisis left a complex legacy. For the West, it reinforced the idea that global energy security required tightly coordinated multinational management. For Iran, the crisis became a symbol of the struggle for sovereignty, a struggle frustrated by foreign intervention. The memory of 1953 shaped Iranian politics for generations and contributed to the anti-Western sentiment that culminated in the 1979 revolution.

Yet the nationalization movement also inspired a global wave of resource sovereignty. By the 1960s and 1970s, many oil-producing nations asserted greater control over their industries, exactly the trend Levy had feared but later analyzed with characteristic nuance.

Map identifying the web of players in Middle Eastern Oil. Box 3, Folder 3, Walter J. Levy papers, Coll. No. 08428, American Heritage Center, University of Wyoming.

A Quiet Architect of Energy History

Walter J. Levy remains a lesser-known figure to the public, but his analyses profoundly shaped Western approaches to the Iranian crisis and the structure of the postwar oil order. Understanding 1953 through his lens reveals how expert knowledge, circulating in reports and briefings rather than headlines, can influence major geopolitical decisions and leave lasting marks on global history.

Post contributed by AHC Archives Aide Rhiannon Skye McLean

To learn more about Mossadegh, Levy, or the Iranian oil crisis, check out the Ottensen District Archive, Stephen Kinzer’s book All the Shah’s Men, and The Mossadegh Project.