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The Iranian people are descendants of an ancient civilisation, culture, tradition and Twelver Shi’ belief ingrained since the Safavid dynasty. These engender pride and, therefore, nationalism in today’s Iran. A study of the country’s recent history reveals the causes, patterns, and nature of resilience we are seeing today.

Iran’s modern story with the West begins in oil wells and ends at a chokepoint. For roughly the first half of the 20th century, Iran mattered above all as Britain’s privileged fuel reserve; by the second half, its strategic importance broadened to include the Strait of Hormuz itself, first with Iran cast as a security provider and later as the main risk to that sea‑lane. The continuity is of geography and hydrocarbons, while the big change is that Iran has moved, in Western eyes, from an asset to a problem.

Iran’s history of concessions

Iran’s oil history reflected an older pattern – a weak monarchy, increasing foreign influence, and a confident Shi’i clergy and merchant class. 19th-century Qajar rulers financed a fragile state by ceding concessions, such as the 1872 Reuter agreement on forests and mining, the 1890 Tobacco monopoly rights to Imperial Tobacco, and the 1901 D’Arcy oil concession. These concessions followed a pattern – trading sovereignty for survival. Resentment grew, leading to clergy- and merchant-led protests and the 1905-11 Constitutional Revolution, which limited royal power and established an elected Parliament, the Majles.

The discovery of oil in 1908 and the formation of the Anglo-Persian Oil Company in 1909 mattered more to London than to Tehran. In 1914, Winston Churchill shifted the Royal Navy from coal to oil, stating, “safety and certainty in oil lie in variety and variety alone”. As a result, Britain acquired 53% of APOC, securing long-term discounted supplies. By the 1930s and 1940s, Iran produced only 5-6% of global oil, but Abadan supplied approximately 50% of the Royal Navy’s peacetime fuel, making it a key strategic asset for the Allies during WWII – a far cry from Churchill’s call to de-risk.

Growth of an oil-centric polity

Resentment within grew, as Reza Khan of the Cossack Brigade seized power in 1921 and crowned himself Shah in 1925, consolidating British-supported authority. He centralised the state, reduced tribal autonomy, tightened control over Khuzestan’s oil, and pursued rapid modernisation. In 1933, he renegotiated the D’Arcy concession for more stable revenues, though still favouring Britain. While income stabilised, perceptions of external dominance persisted, fuelling nationalism under Mossadegh, who became Prime Minister in 1951 and nationalised oil. Britain responded with an embargo, prompting diversification across Kuwait, Iraq, and other Gulf producers. The crisis revealed the vulnerability of an imperial system dependent on a single energy source, and the post-War emergence of economic sanctions.

An Anglo-American coup overthrew Mossadegh in 1953, restoring the Shah’s powers and control over Western oil resources, while granting Iran a 50% profit share, which later became a subject of much dispute. From the 1950s until the late 1970s, oil revenues financed the Shah’s autocratic modernisation. These strengthened Iran’s position under the Nixon Doctrine as an American glacis on the southern Soviet border and as a guardian of the Strait of Hormuz. Britain’s eventual withdrawal east of Suez in 1971 cemented the US-led petrodollar system, allowing Iran to expand its regional influence. Iran seized the Tunb islands and gained joint control of Abu Musa, reinforcing its hold on Hormuz, during the 1973 oil crisis. Western interests had shifted from merely securing oil to ensuring the stability of a pro-Western monarchy that controlled both oil and a key strategic chokepoint.

Transformation of Iran from guardian to threat

The oil wealth that supported the Pahlavi Kingdom also undermined it. Rapid industrialisation, arms buying, and urban growth caused inequality, inflation, and cultural backlash, while repression by SAVAK and limited political freedom alienated much of society. Exiled cleric Ruhollah Khomeini, who opposed the Shah’s ‘White Revolution’ reforms in the 1960s and promoted velayat-e faqih, became a rallying figure for Islamists, nationalists, and leftists. ‘Permissive facilitation’ describes how Western powers were noted to have ignored calls for a military coup when Khomeini’s return from Paris was inevitable – a costly mistake or simply a misjudgement.

Since 1979, Iran has shifted from being a protector of the Strait of Hormuz to being seen as a threat by Western countries. The rift with Washington, marked by the hostage crisis and sanctions, was followed by Iraq’s 1980 invasion, where Saddam aimed for regional dominance. Iraq attacked Kharg Island and tankers serving Iranian ports to choke Tehran’s export route. Iran responded with mines, missiles, and fast boats targeting ships linked to Iraq’s Gulf Arab supporters, notably Kuwait and Saudi Arabia.

Many vessels were sunk or damaged, and global markets watched as insurance costs and risk premiums increased. Kuwait’s request for protection brought the US Navy into reflagging and escort operations in 1987. Iran’s mining of a US frigate caused a one-day conflict in 1988, during which US forces destroyed half of Iran’s active naval fleet and two oil platforms. As a result, from being guardian of a chokepoint, Iran transformed into a hostile oil-rich country, capable of weaponising the same geography.

Since the war, sanctions have served as the economic equivalent to this struggle over sea lanes and oil. After British embargoes in 1952, US-led sanctions shifted from punishing hostage-taking (1979-81) to efforts aimed at containing Iran’s regional behaviour and support for armed groups (late 1980s-1990s). Subsequently, sanctions transitioned to a multilateral siege focused on Iran’s nuclear programme (2006-2013), and following the 2015 JCPOA and its 2018 US abandonment, to a ‘maximum pressure’ campaign targeting nearly every aspect of Iran’s energy and financial sectors.

Each phase aimed to influence Iran’s cost-benefit calculations without resorting to full-scale warfare. These measures encouraged Tehran to further exploit its remaining advantages, namely, clandestine oil sales and harassment of traffic through Hormuz as asymmetric tools, which significantly increase risks for marine traffic, regardless of whether the conflict ends now or never.

The economic and political history of Iran is a lesson in great power dominance and its inevitable frailties. A century ago, the West sought to secure Iran’s oil and a chokepoint: today, that quest threatens the international order.

Safi Ahsan Rizvi is a risk analyst specialising in national and climate security, an IIM Ahmedabad alumnus and former banker who has served in the IPS, IB and NDMA. 

This article first appeared on the author’s Substack, Risk and Resilience. 

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