Iran's lessons for US oil policy in post-Maduro Venezuela

Recent statements suggesting that the United States could "go into Venezuela to help it drill oil" have been framed largely as questions of technical capacity and economic efficiency. Whether such engagement is wise as a matter of energy or foreign policy is a legitimate debate--but it is not the one addressed here.

This piece takes no position on whether the United States should engage in Venezuela's oil sector. Instead, it asks a narrower and more practical question: if the United States chooses to support or permit such engagement, how should it be structured to avoid a historically proven failure--one that destabilized an entire region and continues to shape global politics today.

We have been here before. The precedent is Iran.

A cautionary history

In the first half of the 20th century, Britain dominated Iran's oil industry through the Anglo-Iranian Oil Company, the predecessor to BP. The arrangement was technically successful. Oil flowed. Revenues were generated. The company operated what became the largest refinery in the world at Abadan.

But the structure of the relationship mattered more than its output.

Britain controlled production, pricing and accounting. Iran received royalties but had no audit rights and no meaningful role in management. By the late 1940s, the company was paying more in taxes to the British government than it was paying to Iran for oil extracted entirely from Iranian territory.

This imbalance was not merely economic; it was political. Iranian leaders did not object to foreign participation as such. They objected to exclusion from sovereignty over their most valuable national resource.

That objection became explosive when Britain refused to renegotiate the arrangement--even as other oil-producing countries were securing fairer terms, including 50/50 profit-sharing agreements with U.S. companies. Iran's elected prime minister, Mohammad Mossadegh, responded by nationalizing the oil industry in 1951, framing the move as a lawful assertion of sovereignty rather than ideological hostility to foreign investment.

Britain's response--an embargo, international litigation and diplomatic pressure--failed to restore legitimacy. Instead, it hardened Iranian public opinion and turned oil into a symbol of national humiliation.

Labor conditions were not a side issue

One of the most underestimated aspects of the Iranian experience was labor.

At Abadan, British employees lived in segregated compounds with electricity, clean water, medical care and recreational facilities. Iranian workers often lived in overcrowded settlements without sanitation, earned a fraction of British wages and were excluded from skilled and managerial positions.

These conditions were visible, daily and politically potent. Labor disputes became nationalist protests. Oil was no longer just a commodity; it was a lived experience of inequality.

This matters because policymakers often treat labor conditions as secondary to production targets. History suggests the opposite. Worker dignity is political infrastructure. When it is absent, resentment fills the gap.

The illusion of a short-term fix

In 1953, the United States and Britain orchestrated a covert operation that removed Mossadegh and restored the Shah to power. Oil production resumed. Western companies returned under a consortium arrangement. On paper, the crisis was resolved.

In reality, the damage had been done.

The coup discredited constitutional politics and secular nationalism in Iran. It taught a generation that lawful reform could be undone by foreign power. Over time, opposition movements shifted away from moderate, legal frameworks toward religious and populist ones that framed resistance in moral and civilizational terms.

Oil revenues increased dramatically in later decades, especially during the 1970s boom. But political legitimacy did not. The memory of foreign domination, unequal control and lost sovereignty remained central to public consciousness.

When the Islamic Revolution came in 1979, it was not driven solely by religion or economics. It was also the culmination of a long narrative in which oil symbolized exploitation, external manipulation and the failure of Western-backed modernization to deliver dignity or justice.

The consequences did not stop at Iran's borders. They reshaped regional politics and U.S. relations with the Middle East for generations.

Why this matters for Venezuela

Venezuela's oil industry is nationalized and controlled by PDVSA. Its production decline reflects sanctions, underinvestment and institutional decay--not a lack of resources or technical potential.

Rhetoric suggesting that Venezuela "does not know how to drill" echoes the language once used to justify foreign control in Iran. That language is not merely impolitic; it is strategically dangerous. It frames engagement as rescue rather than partnership and invites nationalist backlash.

History suggests a clear pattern: oil arrangements perceived as coercive or inequitable may succeed briefly, but they rarely survive political change. They are reversed through expropriation, contract repudiation or regime change--and often at significant geopolitical cost.

The real lesson

The lesson of Iran is not that foreign engagement in oil sectors is inherently illegitimate. It is that the manner of engagement is outcome-determinative.

Arrangements that maximize control while minimizing transparency, participation and worker dignity tend to transform commercial relationships into political symbols. Once that happens, efficiency no longer matters. Oil becomes a rallying point, not a revenue stream.

For U.S. decision-makers, the takeaways are pragmatic rather than moral:

• Deals perceived as unfair are unstable

• Agreements signed under pressure are remembered as coercion

• Labor practices are not operational details; they are legitimacy signals

• Rhetoric implying incapacity can undo technical success

• Most importantly, short-term leverage often produces long-term loss

A narrow, practical conclusion

This analysis does not argue for or against U.S. involvement in Venezuela's oil sector. It argues that if such involvement occurs, it must be structured with an awareness of historical failure modes that are well documented and costly.

Britain's experience in Iran shows that oil policy can destabilize not only a country, but an entire region--when control is pursued without fairness, and efficiency without legitimacy.

That is not ideology. It is history.