During 1951–1953 there was an ongoing diplomatic crisis among Iran, Great Britain, and the United States over Mossadegh's actions. Beginning in November 1951, Mossadegh requested that Western nations that had purchased Iranian oil in the past confirm their current orders with the newly nationalized Iranian oil industry. The British took immediate action by pressuring purchasing nations not to cooperate with Mossadegh's request.
At first, the United States took a rather neutral stance in the crisis, siding completely with neither London nor Tehran. The Americans' chief concern was keeping Iranian oil out of Soviet control rather than saving the Anglo-Iranian Oil Company. U.S. Secretary of State Dean Acheson urged Britain to accept Iran's nationalization and instead aim at maintaining control over the technical aspects of oil production. Throughout much of 1951, the United States regarded Iran's continued alliance with the West as a priority over British economic interests.
President Harry S. Truman sought to broker a settlement between Tehran and London based on the acceptance of Iranian nationalization in return for British control over oil production and drilling. At the same time, British officials were divided over whether launching a war against Iran was a viable option to ending the standoff. The British Foreign Office seemed willing to entertain the idea of military force, while British Prime Minister Clement Attlee steadfastly opposed it.
Nevertheless, the British government refused to negotiate with the Iranians and instead opted to impose economic sanctions on Mossadegh's regime. On 10 September 1951, Britain took measures to prevent purchases of Iranian oil on the international market.
Meanwhile, the United States and Britain were moving closer together on ending the crisis. Throughout the autumn of 1951, the Truman administration became less neutral. As time went on, the U.S. State Department trusted Mossadegh less and less. From January 1952 on, the United States became increasingly concerned about Iran's internal economic stability. America maintained that Mossadegh was now increasingly likely to turn to Moscow to stabilize Iran's economy. By the spring of 1952, these concerns led the Americans to view regime change as a viable path to ending the crisis. Between the end of 1951 and July 1952, the Americans hoped that this would happen as a result of the dispute between Shah Mohammad Reza Pahlavi of Iran and Mossadegh over which of the two would control the Persian Army. In the fall of 1952 Tehran broke diplomatic relations with London.
In January 1953 Dwight D. Eisenhower became president of the United States. The failure of diplomacy coupled with the Eisenhower administration's eagerness to end the crisis opened the door for the coup d'état of August 1953. The Eisenhower administration supported regime change in Iran in a coup organized by the Central Intelligence Agency (CIA). U.S. policymakers were particularly alarmed at the possibility that Mossadegh would bring the communists to power in Iran. Supported by the British government as well and carried out on 19 August of that year, the coup returned Shah Pahlavi to power. The British and American governments then established an Anglo-American oil consortium on 12 April 1954.
Bamberg, James. British Petroleum and Global Oil, 1950-75: The Challenge to Nationalism. Cambridge: Cambridge University Press, 2000.; Heiss, Mary Ann. Empire and Nationhood: The United States, Great Britain, and Iranian Oil, 1950–54. New York: Columbia University Press, 1997.; Marsh, Steve. Anglo-American Relations and Cold War Oil. London: Palgrave MacMillan, 2003.