The Impact of Oil on the American-British Rivalry in Bahrain and Its Repercussions on U.S.–Bahraini Relations (1932–1945)

Abstract

Before the discovery of oil, local industry in Bahrain was small and limited, and was based on meeting basic needs. Industries called “oasis industry” included: pottery, shipbuilding, and copper works. Most of the ships that were built during the first half of the nineteenth century were small to medium-sized. Bahrain relied on fishing, pearl diving, agriculture, trade, and herding for its basic resources before oil. However, the discovery of oil in commercial quantities changed that equation, as Bahrain became the first Gulf country to discover oil, after signing the first exploration concession in 1925, then establishing the Bahrain Petroleum Company Limited (BAPCO) in January 1929. In 1932, oil was discovered in the Jabal al-Dukhan area by the American company Standard Oil Company of California (SOCAL), and commercial production began. Due to the increasing production rates, the first oil refinery was established in 1936, with a capacity of (10) thousand barrels per day. In 1945, a pipeline was extended from Saudi Arabia to Bahrain to refine part of From Saudi oil in the refinery, this enhanced regional cooperation in the energy sector and expanded Bahrain's role as a strategic hub in the oil trade. Bahrain's development plans are directed towards manufacturing and services as the two sectors that most support the country's economy. However, the petroleum industry remains the main source of income and employment. The Bahrain Petroleum Company (Bapco) was the largest employer and played a prominent role in the labor market, making it a fundamental pillar of the local economy. The discovery of oil also reshaped the country's social and political structure and opened the door to major transformations in its international relations, particularly with the United States, which it found to be an important economic and strategic partner in the Arabian Gulf region. This represented a starting point for bilateral relations in broader areas of cooperation in the following decades.